Eoghan Murphy (Dublin Bay South, Fine Gael) | Oireachtas source

In Ireland, the provision of insurance through private companies has been the norm for a long time. This is an operational model which has in general been shown to work well and efficiently. It is acknowledged that over the last 18 months or so, there have been some difficulties with aspects of the system, particularly in relation to the availability and cost of motor insurance. However, a State-owned company would have to operate subject to the same prudential rules as a private company and there is no basis to conclude that the same problems would not periodically arise with this model. In addition, there would be significant capital costs for the State.

The Government has in the past examined the introduction of a scheme of State indemnification in the flood insurance sector. However, this approach was not considered financially viable because it was concluded that over time it would distort the market and could incentivise the insurance industry to discontinue the provision of insurance cover in medium and high risk areas. This would make the cost of such a scheme prohibitive. Furthermore, potentially complex regulatory implications would need to be examined in detail in consultation with the Central Bank of Ireland and the Office of the Attorney General.

In relation to the current difficulties in the market for motor insurance, the cost of insurance working group, which I chair, is undertaking a review of the factors which are influencing the increased cost of motor insurance. The working group brings together all of the relevant Departments and offices involved in the process. Its objective is to identify immediate and longer-term measures which can address increasing costs, while bearing in mind the need to maintain a stable insurance sector. By the end of October, the working group will provide the Minister for Finance with an update report which will set out the priority actions required. From November to December, the working group will develop an action plan to enable the relevant Government Departments and offices to commence the implementation of these priority actions. In this regard, I will be consulting regularly with Government colleagues and also with the Oireachtas.

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