Dr. Cyril Roux:

In one word, "Yes". Leaving aside my hat as Financial Regulator while putting on my Central Bank one, the Central Bank is part of the European system of such banks. Its mandate is to ensure price stability. When prices get out of hand in general, inflation affects people's lives. Inflation affects the poor disproportionately. That is why the European Central Bank is taking these actions, namely, to ensure price stability.

However, in the main, it has succeeded. Although price inflation is not exactly where the ECB wants it to be, it is very low. This means that, on average, price inflation is low. It does not mean that some prices do not increase. Insurance prices are increasing very sharply.

This raises the question as to whether rural parts of the country are suffering from local inflation in terms of their basket of goods and services. I do not know the answer to that but they suffer an increase in those prices and they also suffer increases in other prices. Health insurance premiums are increasing and the price of other items is also increasing, but the price of some items is decreasing. For example, energy and fuel prices are decreasing. In the main, overall, I am sure that some people noticed price inflation. The price inflation of the goods and services they buy is significant, but as to whether it is a significant problem across the board, I do not know. If that is the case, that is a matter for this committee and for the Oireachtas as a whole to decide whether and how to counter-balance the disproportionate effect inflation might have on some segments of the population.

I would add a further comment. The €1.3 billion in premiums that was mentioned by the Senator that is being taken out of the pockets of people is being given back in that claims are at the same level as premiums. That money is not given back only to policyholders and victims, because insurance companies have to pay their lawyers and their fees can account for a large chunk of the money. Claims have been increasing and sometimes that is to cover actual loss and sometimes it is cover questionable loss. With respect to claims, the Senator has probably heard that much of it is blanket money given to every person claiming they have suffered whiplash. Some people have suffered whiplash but the handing over of €15,000 to any person who says he or she has suffered whiplash is money that goes back into his or her pocket. In some cases such payments are warranted but in other cases they are not. Such payments act as a redistribution machine. A total of €1.3 billion in premiums is being taken out of people's pockets but €1.3 billion in claims settlements is being redistributed to other people's pockets.