Pauline Tully (Cavan-Monaghan, Sinn Fein) | Oireachtas source

Commitments made by the insurance industry that a reduction in insurance awards would result in a reduction in insurance costs for consumers are not being met. In fact, many motorists, homeowners and business people are seeing their premiums increase. When members of the insurance industry appeared before the Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach, their call for the implementation of personal injury guidelines was made with the commitment that a reduction in the volume of claims would result in a reduction in the price of premiums. With that in mind, the Oireachtas passed legislation to that end and the guidelines took legal effect on 24 April last, replacing the book of quantum in determining the level of awards in personal injury cases. The Judicial Council subsequently reduced the awards payable substantially in the light of the guidelines.

On the day the new guidelines came into force, the director of the Alliance for Insurance Reform was reported in The Irish Timesas saying he expected insurance premium charges to be "significantly reduced" from the following Monday. However, the insurance industry has put the brakes on many of the commitments it made in terms of reducing premium costs. We are not seeing much evidence of the industry passing on those savings. Premiums have not been reduced for motorists, homeowners and business people in line with the reduction in awards. It seems the insurance companies have simply pocketed the bulk of the savings arising from the reductions in awards, despite the commitments they gave.

Since the guidelines came into effect, we have seen a dramatic reduction in insurance awards, with the level decreasing in some cases by more than 50%. We need a way to verify that those reductions in awards are passed on to consumers in the form of lower insurance prices. The legislation introduced by my colleague, Deputy Doherty, will ensure that happens and will provided much-needed transparency on this issue. It will provide the Department of Finance with the ability to make regulations that require insurance companies to provide information to the Central Bank on how the new personal injury guidelines have impacted on premiums for policyholders. It will force the industry to pass the savings it makes on to its customers.

Similar regulations have come into effect in Britain, where many insurers in the Irish market also operate. The operations of those companies in Ireland should be subject to no less scrutiny. Consumers cannot afford to wait any longer. The Government cannot just sit back and hope insurance companies will do the right thing by reducing premiums. The industry needs to be held to account and this legislation will allow that to happen.

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