Mr. Donall O'Keeffe:

We met Insurance Ireland. It was the first meeting we had when we started to explore the insurance issue in late August or early September. The insurance industry is inclined to point to the legal expenses and the level of the awards as the core problems while the legal people point to the insurance industry, the lack of competition and escalating premiums as the core problems. Everybody is alluding to false and exaggerated claims as issues. Specifically in the context of the insurance industry, there is no doubt that solvency, low interest rates and low market returns are affecting its finances but this element is not core to the business of insurance, as in managing premiums and dealing with claims.

Our first request to this committee and the Government is that there be an economic analysis to quantify exactly which factors are driving the premium rises. Is it awards? This does not seem to be the case. Is it the number of awards, as in an escalating claims culture? We do not believe so. Is it the legal costs? We have no clarity on it. Is it exaggerated, false or bumped-up claims? Nobody seems to have information on that or, at least, there is none that we can lay our hands on. The lack of clarity or opaqueness that is applying in the market is a fundamental problem. Certainly, no insurance company from outside the country will look into a market in which one cannot figure out the dynamics and invest heavily. There is a very big demand regarding solvency capital requirements. The companies will not take a risk in this regard when they cannot understand the dynamics. An economic study, independent of the industry, is required to quantify the drivers of costs is the single most urgent step that needs to be taken.