Michael Noonan (Limerick City, Fine Gael) | Oireachtas source

I thank Deputy McGrath for his personal good wishes and for raising this very important issue this morning. As Minister for Finance, I am concerned that there should be a stable insurance sector and that risks to policy holders and to the wider financial system are limited.  I am aware of reports of the increasing cost of motor insurance.  However, the ability of the Government to influence insurance pricing is limited, as insurance companies are required under European law to price in accordance with risk, and neither I, as Minister for Finance, nor the Central Bank of Ireland have the power to direct insurance companies on the pricing of insurance products. 

The Central Bank advises me that competitive conditions within the insurance market intensified in recent years and that many firms focused on maintaining market share, which provided an impetus towards lower premiums.  Competition on premiums was subsidised by investment income and other measures.  Recent reversals in investment markets have generated investment losses that are a drag on profitability.  In the view of the Central Bank, the recent premium increases are aimed at restoring core underwriting profitability and to securing the financial position of the firms concerned for the longer term.

While the provision and pricing of insurance policies is a commercial matter for insurance companies, this does not preclude the Government from introducing measures that may, in the longer term, lead to a better claims environment that could facilitate a reduction in claims costs.

The question of the cost of insurance is a complex one involving a number of Government Departments, State bodies and private sector organisations.  Whilst I do not intend to reconstitute the Motor Insurance Advisory Board at this time, I have asked my officials to examine the factors which contribute to increasing costs of insurance.  This work is part of an overall review of the insurance sector which my Department will undertake in consultation with the Central Bank and other Departments and agencies.  This work will continue over the coming months and will involve engagement with a number of parties both public and private.

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