Peter Fitzpatrick (Louth, Fine Gael) | Oireachtas source

I welcome the opportunity to speak today on this important topic. Insurance costs in Ireland, both general and motor, have risen considerably in recent years, and figures from the Central Statistics Office show that insurance costs in Ireland have risen by almost 30% since 2011 with motor insurance prices rising almost 34% over the same period. These rises are unsustainable and from dealing with my constituents, I am familiar with the true cost of rising insurance prices. I have heard of cases in which premium prices have risen by 400% or even more. I regularly hear of premium prices being quoted at €4,000 and more for cars that are worth much less than that. In one case, a constituent who drives a 2000 Polo with a 1-litre engine was given a quote of €5,000 for insurance, which would be reduced to €3,000 were he to install a driving monitor box. He has a full driving licence and a no-claims bonus. Other people who had been paying annual premiums of approximately €500 are now being asked to pay premiums in excess of €1,000 and in some cases are not being given quotations at all.

It is my understanding that County Louth is one of the hardest hit areas when it comes to insurance premiums and this situation must not be allowed to continue. Members must get to the bottom of why premiums are rising so dramatically, particularly over the past 12 months. I welcome that the Department of Finance has a task force carrying out a review on the insurance industry, which will report to the Minister shortly. This review is badly needed and I look forward to reading its findings. I have spoken to various people in the insurance industry who have offered a number of reasons for rising insurance costs. These include past underpricing in an effort to win market share, High Court awards and legal fees, the role of the Injuries Board, and an increase in the number of claims. Moreover, in the past, there was subsidisation of competition on premiums by investment income and other measures. In addition, claimants are now more likely to engage a solicitor to handle claims, resulting in claims taking longer to settle and in higher legal fees. Another cause for concern is the incidence of fraudulent claims.

While I understand the reasons given by the insurance industry for increased premiums, I do not believe these costs alone could result in such dramatic increases in premiums. As I stated earlier, I look forward to the findings of the task force put in place by the Department of Finance. I believe radical reform is required, particularly in the areas of legal fees and awards given. I believe both the awards given and the legal fees charged are too high. It is estimated that legal fees can make up to 60% of the cost of claims. This is too high and must be addressed. We must also consider the area of fraud. Fraud is costing the industry and although measures have been taken recently to address it, more is needed. Members must get tough on fraud and it must not be allowed to be perceived to be acceptable.

In conclusion, I reiterate the point that serious reform is required in the insurance industry. Members must tackle immediately the causes of rising insurance costs. They must identify the causes of such a dramatic rise in insurance premiums and I believe we must reform the Injuries Board. Finally, I look forward to the findings of the task force set up by the Department of Finance to examine the rising costs of insurance. Members must act now to ensure that insurance costs are brought under control.

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