Mr. Conor Faughnan:

I believe so. The Civil Liability and Courts Act specifies that the discount rate will be set by the Minister for Justice and Equality. The Minister for Justice and Equality is the Tánaiste at the moment and we have discussed it with her. I appreciate it might not be quite as simple and that there are other technical provisions. A number of court cases are pending which would affect the State Claims Agency. I am not over-simplifying the landscape and saying that the Tánaiste has a pen in her hand that she refuses to wield. Nevertheless we should work this through. It may seem a little bit absurd to say this but from the insurance industry's point of view, it almost does not mind what the rate is once it knows there is a definitive rate. The Deputy asked if it was just the book of quantum and only the discount rate. It is a combination of factors. I will give a potted history in 30 seconds. For about ten years, motor insurance premiums in Ireland fell year on year up to around 2014. They began to fall recklessly and an Irish motor insurance premium was significantly less than a British one. I have said before that, collectively, the industry was rather stupid. It thought it was making money but it was not. It realised as the claims matured over a seven-year claim cycle that it was actually losing money. A couple of things really startled the herd. One was the failure of Setanta which has left behind almost €30 million in debts. Then there were other insurers which ran into serious trading problems. One of the major brand names still trading in Ireland hit reserving problems and had to transfer an enormous amount of capital across from its parent. The industry collectively was like a herd of wildebeest on the edge of the stream. Insurance providers all knew they had to increase rates but they all were competing on price and were afraid to be the one to make the first move. Then the Setanta failure and other issues happened and they all went charging across the stream.

In a sense, insurance providers have gone too far now and it has become excessive but they are taking advice from their actuaries. Their actuaries are having to assume the perfect storm. They are having to assume that Setanta means that they will have to pick up the liabilities if another insurer fails. If another insurer fails, they will have to pay the bill. They have to assume that the discount rate is going to live at 1% rather than 3%. That is 7% on the amount of premiums that they have to claim. They have to assume that the recent rise in court awards, which happened when court award thresholds went up a couple of years ago, is the new normal. If all of those things are baked in as the new normal and there are other layers like Solvency II Directive, which is the European provision around reserving, there is no choice. If they do those calculations, they must increase their premiums or they will not have adequate reserves.

We should do what we can to provide clarity around those numbers, reduce claims happening in the first instance and reduce the cost of those claims when they happen. Those measures all have an effect even greater than their primary number because they reduce uncertainty and make the actuaries less requiring of caution. That in turn will feed directly into premiums.