Pearse Doherty (Donegal, Sinn Fein) | Oireachtas source

The Minister of State mentioned a number of uncertainties but some of them have not taken effect. For example, payments have not changed and, as stated in the report, the legal cost has not been a major factor. Fraud only gets a footnote in the report which would suggest that fraud is not an issue. As mentioned by the Minister of State, the real change is that previously there was a race to the bottom in terms of premiums which resulted in under-pricing by the companies who were competing against each other and there has been a huge reduction in the yield return in terms of bonds. While many of the recommendations in this report are sensible and welcome - some of them are being long fingered but I will deal with that later - I am not convinced that what is proposed would have done much to prevent the massive increases in premiums. The boom-bust cycle is still there. I am not sure what is proposed will break it. All it will do is give us a bit more information in terms of when things are going boom or going bust. It will not stop that from happening.

The Central Bank has allowed this spike to occur. The spike in cost is not only in the motor insurance area. The Central Bank is behind the curve on a lot of things. For example, under PPI, which is another insurance issue, 70,000 plus customers received refunds for what I would call insurance fraud by insurance companies, some of which are also providing motor insurance. Some 22% of all policies that were sold in this State were mis-sold such that €70 million had to be repaid to customers. It is only two years since that happened. As I said, the Central Bank is behind the curve on all of this. It only investigates when people make a complaint such that it is often only following a complaint and investigation of that complaint that we learn that one in four people was sold fraudulent policies in respect of which the providers were required to refund the consumer. The same applies to tracker mortgages and so on.

Can the Minister of State point to me where in this report provision is made for an increase in the powers of the Central Bank to put an end to this type of boom and bust policy whereby premiums are going to low positions and then dramatically increasing? People are happy when premiums are low and unhappy when they are high but the biggest problem is when they increase by 30% or 40% because people cannot budget for that type of increase.