Mick Barry (Cork North Central, Solidarity) | Oireachtas source

9 o’clock

I put it onto my Facebook page this morning that I was going to be taking part in a debate on car insurance. The messages came thick and fast and I will read four:

Axa Insurance Ireland, €2,800, Axa Insurance Scotland, €380. Same care, same driver, same cover.

Another read: "Axa is charging over €7,000 for new entrants to the taxi business, no matter what their NCB is." A third read:

Last year my insurance was €680. No accidents or changes this year and it rose to €1,280. Full NCT and only one company would quote renewal as car is 1999 with only 60,000 miles.

And a fourth:

Hi Mick. I am 66. Full no claims for many years. Rural. In 2015 I was paying €410 for fully comprehensive on a Volkswagen Passat. In 2017 it is €725. No change in car; no change in circumstances.

Previous speakers have pointed to some of the weaknesses in the motion but the motion correctly identifies a number of ongoing obstacles faced by various categories of driver in obtaining quotes, never mind affordable quotes. There is a justified rebuke of the Government for its inaction since the cost of insurance working group was established over a year and a half ago and in which my colleague, Deputy Paul Murphy, participated. The motion argues, among other things, for the removal of these discriminatory obstacles and for more transparency in how companies work out their premium quotes. That is all well and good but I have a number of criticisms of the motion. First, it is virtually silent on the economics of car insurance and, specifically, on the profit gouging that the industry has been engaged in over the past 20 years. The Government-led clean-ups of various insurance firms that ran aground during that period, such as PMPA, Quinn and Setanta, all came at a cost to policy holders.

The other criticism I have is that the motion points in the direction of regulating the industry, rather than looking at the radical alternative which we advocate, namely, an affordable, State-administered motor insurance scheme. We have heard the poor mouth of the industry but FBD profits are up more than fourfold, from €11.4 million to €49.7 million in 2017 and there was a dividend payout of 24 cent per share. RSA profits more than doubled to €10.7 million and the dividend payout increased by 23%. Motor insurance companies made €2.866 billion in profit from 1994 to 2014. If that insurance had been run on a non-profit basis, it would have cost policy holders €2.866 billion less or saved them an average of €136.5 million per year for each of those 20 years.

The last time that average surplus per policy was published was 2013. That was a bad year for the insurance industry but it still made an average profit of €186 per policy. What is it making now? The highest profits are made off the backs of the much-maligned younger and poorer drivers, including returned emigrants. Up-to-date figures are unavailable but the biggest surpluses for 2009 policies were made off male drivers aged between 21 and 24 on provisional licences, at €560 off an average annual premium of €1,422.

The biggest surplus for drivers on full licences was €287 for 17 to 20 year old males off an annual average premium of €1,701. Surpluses among this age group tend to be larger for comprehensive policies, which was unusual as, according to the Central Bank, typically surpluses are larger for third party, fire and theft cover. In other words, the industry usually makes bigger profits off the cheaper insurance policies, which are generally bought by people who cannot afford comprehensive insurance. Younger drivers are far more likely to be on third party, fire and theft cover. We call for non-profit, State-run car insurance where premiums are based on a combination of genuine risk and ability to pay. This could still allow for no-claims bonuses for safe drivers and increased premia for drivers with a demonstrably bad record.

We should look at the car industry itself and take measures to make driving safer. For example, we should reduce the severity of accidents by banning cars capable of driving way over the speed limit or accelerating really fast, which are basically marketing gimmicks, and we should mandate higher safety standards for manufacturers. This is the discussion we need to have.

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