Dáil debates

Thursday, 16 February 2017

Motor Insurance Costs: Motion

 

8:30 pm

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

Deputy Breathnach raised the issue of competition. The lack of transparency in the insurance market is hurting competition. The joint committee focused on this issue. If more companies compete in the market in a safe manner under current Central Bank prudential regulation and the new Solvency II limits and everything else we are trying to achieve in the report, we will attract new entrants to the market in a sustainable and safe manner that will not result in the race to the bottom that we had in the past. The recommendations must be acted upon. For this reason, we have 71 actions stemming from 33 recommendations, with timelines and different owners for each action.

Telematics will revolutionise how we drive on our roads and the insurance sector. Some companies use this technology and we want more companies to do so. This is one of the recommendations and actions in the report.

We have examined different models of insurance and more work will be done in this area. Deputies spoke about having insurance costs covered through paying at the pump. This approach would penalise those who drive more. People may argue that those who drive more are more of a risk but that is not necessarily the case. This depends on the routes driven. A pay-at-the-pump model would be highly damaging for business. My initial view is that we should continue to look at models that are based on risk. We have discussed this issue previously but more work will be done on it. It is not, however, a priority because we need to fix the insurance industry we have now to get it to work for people who are purchasing insurance now.

We are examining the issue of public liability while I drive the implementation of the report. We will not have to wait for ten years to fix this sector. What we are trying do through the motor insurance report is a two-year process and the public liability side will be an addendum to the report. We are looking at having a time horizon of between two and three years within which we will have reformed the insurance sector.

Deputy Curran referred to levelling out premiums. As the proposed actions are implemented, we hope to drive fairer premiums for consumers. This would mean a reduction in the increase that consumers have experienced in the past couple of years. We will not return to the types of premiums we had ten years ago because they were not sustainable or affordable.

We have prioritised some actions over others. We had to put in place realistic timelines. The database on uninsured drivers will go live in quarter three of this year, starting with private vehicles. It will not be kicked out any further and the commitment on this in the report will be met.

Deputy Pearse Doherty stated the horse had bolted. This is because we did not have transparency with regard to data, information and the insurance industry. For this reasons, it was not clear exactly what would happen. Now that we are introducing reform and transparency, we will get a better idea of exactly what are the trends in the market and we will be able to take whatever actions are necessary in future to counter them. The boom and bust cycle is referred to in the report from the working group and measures have been implemented to prevent it. One of these is Solvency II, which is very important. The national claims information database will deliver the level of transparency we all seek and will also help prevent a boom and bust cycle developing.

I discussed with Deputy Doherty the increase in premiums at a meeting of the joint committee earlier. The Deputy makes relevant points in this regard. We can, in some ways, separate out the history and problems associated with the insurance industry. Part of the problem is that premiums were too low, in other words, underpricing. Part of the problem is the loss in yield from companies' investments abroad to counterbalance the risks they were assuming. Another problem is the recent uncertainties arising from changes in court jurisdictional limits, the introduction of PPOs, issues around Setanta Insurance and other matters. There are two different factors involved in the trend towards increasing premiums in recent years.

I am not recommending the privatisation of the police force and this is not provided for in the report. This approach is working in another jurisdiction and it is only sensible that we examine whether it could work here. I discussed the matter with Deputy Doherty in the committee and we will discuss it again. We should consider the issue to rule it in or out.

I cannot give a commitment on a timeline by which an action will be taken at European Union level because action must be taken in a co-ordinated manner involving 27 member states. It will probably not be completed before the Brexit process concludes, although I hope it will not take that long. How can I commit to a timeline that operates at EU level?

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