Stephen Donnelly (Wicklow, Social Democrats) | Oireachtas source

I wish the Minister of State, Deputy Eoghan Murphy, all the best on his appointment. It is a great honour for him and his family. With financial services and government procurement in his portfolio, a background in nuclear disarmament may prove to be quite useful. I wish the Minister of State the best in his job.

The Social Democrats support this motion on the establishment of a task force to examine the rising costs of motor insurance in Ireland. However, we would like to go further than that. We all know that motor insurance costs are skyrocketing. According to the Central Statistics Office, insurance costs increased by 32% in the last 12 months. We all know that at least some of the reasons for these increases are historic under-pricing by insurers, new rules requiring higher reserves to be put aside, elevated personal injury awards and lower investment returns. These costs are being passed on to motorists, with drivers being asked to pay an additional 50%, 75%, or in some cases 100%. People are being stunned by their motor insurance renewal bills. The reaction of some people is to question what they have done wrong that has caused their premiums to increase.

Members of the Freight Transport Association recently reported premium increases of 50%, with some being asked to pay increases of up to 70% on their 2014-2015 premiums. It is not only in motor insurance that this is happening. Up to the end of March this year, home insurance premiums had increased by approximately 10%, and health insurance premiums have increased by more than 3% in the past year. This is in spite of the fact that 100,000 extra people have taken out health insurance following the introduction of lifetime community rating. The cost of health insurance for hundreds of thousands of VHI customers increased by an average of 3% since the beginning of May. This is the second increase announced by the State's private health insurer in the last six months. It rolled out an average price increase of 2% last November.

As alluded to by other members, insurance costs for businesses are also worrying. The Small Firms Association, SFA, reports that insurance costs for its members have increased by approximately 30% since 2011, which is a significant additional cost for any firm to bear, particularly small firms around the country that are hanging on by their fingernails. This amounts to an increase in the average cost per claim of 8% in private motor insurance, 27% in employer liability and 8% in public liability. Clearly, the average claim is increasing at a steep rate. How do we address this? We need to drive down average claim costs. We can reform how awards are set by the Injuries Board and the courts. We must also have better non-litigation options such that legal fees are reduced.

I listened to a debate on this issue last night during which it was reported that 70% of claims are being settled out of court. There is no record of those transactions. The industry, rather than the State, is at fault in that regard. The industry must invest in proper data sharing. This happens in the UK and in Northern Ireland. Firms that are engaged here and in the North have invested in serious data sharing in the North but they have not done so here. The AA has suggested that a task force of all Government agencies be established. Obviously, this is a multi-departmental issue. The problem is not just related to motor insurance, nor is it related to insurance generally; rather, it is a problem related to the cost of living and the cost of doing business in Ireland. Child care costs here are the second highest in the OECD. Rents here have increased by over one third since 2011 and the cost of education has increased by almost 20% since 2011. Variable interest rates here are also much higher than in most European countries. The Social Democrats support the establishment of a task force on motor insurance, but we believe we have to be much more ambitious than that.

There needs to be a task force - be it an expert group, an Oireachtas committee or some combination of these - which considers not just motor insurance or the insurance industry but which also systematically addresses the cost of living and of doing business and comes back with a multi-agency, multi-departmental recommendation so that people can get on with their lives. Then the money in their pockets can buy them more, they can afford a decent standard of living and small firms can reduce the cost of doing business and get on with expanding their operations and employing people.

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