Mr. Michael Horan:

There are a number of factors contributing to premium increases. As we said in our opening remarks, there was a certain amount of underpricing in the market as well as lower investment returns and higher claims costs. We believe the claims costs are the major factor. The Central Bank's recent thematic review shows that claims frequency was up by 8% and the average cost was also up by 8%. Another factor is the adverse development of existing claims. This is where insurers have claims already on their books and have to increase the reserves on them.

A number of things happened in 2014 that caused the change. We had three changes in 2014 that had a retrospective effect on claims that were already open and had already been made but not settled. The main change was the increase the financial limits of the courts. The Circuit Court limit increased from €38,000 to €60,000. There were two other changes as well. Legislation introduced what was known as the recoverable benefits and assistance scheme. Previously, insurers could deduct social welfare benefits from personal injury claims but the legislation required them to may repayments to the Department of Social Protection. The third change related to what is known as the discount rate at the end of 2014. This affected catastrophic injury claims. Given low investment returns, it was determined that we needed higher lump sum payments. All these had a retrospective effect and required insurance companies to effectively go back and increase their reserves. This fed in to the cost of claims and that has been a factor. The three things together - underpricing, lower investment returns and the higher cost of claims, driven by what I have described-----