Bríd Smith (Dublin South Central, People Before Profit Alliance) | Oireachtas source

We are talking today about an issue where legal costs represent 60% of the total cost of motor insurance, and despite this, the legal industry is the sector that is least touched in terms of this. Despite the portrayal by the industry of the real cause of the increase in cost being the young, fast-moving drivers who are fraudulent, who get whiplash at the drop of a hat and who are making all sorts of spurious claims, the real costs are much more hidden, in terms of both legal costs and profits.

When one looks at the profits of the big three insurance companies, it is quite interesting that they are not actually hurting all that badly. Aviva's profits were up by 38.5% in 2015. I know that includes all its profits, but nevertheless these are the profits of a company that insures everything from medical expenses to houses. It may well be hurting a wee bit on car insurance, but it is certainly making up for it elsewhere. In the same period, AXA Insurance made €76.9 million in profits and Allianz made €43.3 million. They claim their costs have increased, but their profits are certainly very healthy indeed. The Injuries Board shows a modest 8% increase in new claims in the 18 months to the middle of 2015. Some 70% of personal injury claims do not go to court, although there may be legal costs attached to them. The arguments of the industry that the claims are the problem do not really stack up and there is no real evidence to show it. The companies themselves have cited, among other reasons, a drop in investment income. In other words, they are investing money and profits in stocks and shares and the returns on these are dropping.

Advice received by the previous Minister for Transport, Tourism and Sport, Deputy Paschal Donohoe, from his own officials showed scepticism of the industry's claims about premiums rising because of compensation awards. They were very sceptical of these claims. The quote I would like to give Deputies from that advice is that from examining the evidence of awards it appears “motor insurers are now imposing higher premium rates to return themselves to profitability or to boost profitability after a number of years of insurers competing for market share, with prices driven down”. The officials also stated, “[t]he question does arise for motor insurers – if motor insurance is so unprofitable why does anybody do it?” We are constantly being told that competition is a healthy thing. It is supposed to be more efficient and it is supposed to improve the industry, but here is an example of the market ruling and making an absolute bags of an issue. It is making a bags of an issue where people are fundamentally legally required to have motor insurance but still the market does them nothing but disservice.

The only way we can improve this situation for the ordinary Joe and Josephine Soaps, who are so well got to the hearts of the Fianna Fáil Party, is to have a State-run, publicly owned and controlled and publicly accountable company that will insure people who are legally obliged to have insurance. We need a company that is not subject to the diktat of the market, trying to make a quick buck by investing in stocks and shares, but rather serving the needs of the people for medical and other cover when they require insurance. There will be a cavalcade of protesters on this issue - young, old, long, tall, medium and short, the ordinary Joe and Josephine Soaps from Cavan to Kerry - descending on this city on Saturday, 2 July. It will be a well-organised cavalcade to protest against the soaring cost of insurance. I hope most Deputies who genuinely have the interest of Joe and Josephine Soap at heart will be out to support that protest.

See this speech in context