Professor Philip Lane:

I think this committee's report and the working group identified all the issues. Our role in this regard is to make sure that the insurance firms have the resources to pay out on claims and that they do not collapse. We want to make sure they are making profits and have enough reserves to pay out on claims. If the cost of claims is going up and if companies cannot compensate through investment income, the end result is that premiums go up. Equally, they can remain profitable with a lower cost of insurance and lower premia if all of the working group's reforms drive down the costs. Essentially, it is a sustainability issue. We need to ensure insurance companies are sustainable but if costs can be brought down, that is consistent with falling premia so it would be good news for premiums to fall as long as it is on the basis of the cost base falling to justify that. Many policies can help with that.