Tuesday, 17 December 2019
It is a published number. I believe it comes from the CSO, but I will provide the Deputy with the source by the end of the day. I am sure he will be good enough to retract his earlier remarks when he sees the data I produce. As I said earlier, the cost of motor insurance has gone down by approximately 26% since it peaked in 2016.
It went up before that. Now we need to make sure we drive it down further because the cost of motor insurance is still too high in Ireland for young drivers and all other drivers. Our objective is to make sure we bring down the cost of insurance over the next couple of months and years.
The report published yesterday is the report of the national claims information database. I commend the Central Bank for its work on publishing the report. It is worth noting that this report was produced only as a consequence of Government action on insurance. I compliment the Minister of State, Deputy D'Arcy, in particular, in that regard. The national claims information database was set up on foot of a recommendation of the Government's cost of insurance working group because we did not have enough data and transparency on insurance. That is why we asked for the report to be produced. It would not have been produced had there not been Government action. It carries out an in-depth analysis of annual trends of non-life insurance claims. This is seen as crucial in developing an understanding of how claims costs impact on premiums and, in particular, an understanding of the relationship between the price paid by the customer for motor insurance and the cost to insurance undertakings. This is the first report and it covers the ten-year period between 2009 and 2018. It highlights the importance of the cost of claims to the level of insurance premiums. However, it also highlights the highly cyclical nature of the insurance market and, in particular, the growth in insurance premiums relative to the cost of claims and the growth in profitability of the motor insurance underwriting sector since 2015. The report provides information on how claims are settled, the time it takes, and the legal costs associated with the various settlement channels. This information had not been previously available. Therefore, the conclusions from this part of the report are just as important as the premium claims element.
I believe the report shows that both the insurance and legal centres have a role to play and questions to answer with regard to the difficulties we have faced in recent years when it comes to the cost of car insurance. It appears that insurers underpriced in the early part of this decade and then increased premiums beyond levels that were needed to cover losses incurred, and consequently are now making significant profits. At the same time, the legal costs associated with the litigation settlement channel seem disproportionate when one considers that the report indicates the award levels for those settlements under €100,000 are not much higher than equivalent settlements of the PIAB. In addition, the length of time to settle the claims is nearly two years longer than in the PIAB, which in itself drives up the cost of insurance. The Central Bank will finalise its report on the feasibility of expanding the database to cover employer liability and public liability as the next step.