Dáil debates

Wednesday, 18 May 2016

2:10 pm

Photo of Thomas ByrneThomas Byrne (Meath East, Fianna Fail)
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8. To ask the Minister for Finance when he will complete his review of the insurance sector; the process for implementing measures to reduce motor insurance inflation; and if he will make a statement on the matter. [10517/16]

Photo of Michael NoonanMichael Noonan (Limerick City, Fine Gael)
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We are all aware of the rising cost of insurance, particularly motor insurance, and will recall that the House allocated three hours to debate the matter on 20 April. I have noted the widespread concern across the House about insurance costs and noted the Dáíl statements made on that day. The ability of the Government to influence insurance practices and pricing is limited as insurance companies are required under European law to price in accordance with risk. Neither I, as Minister for Finance, nor the Central Bank of Ireland has the power to direct insurance companies on the pricing or provision of insurance products. However, that does not preclude the Government from introducing measures that may in the longer term lead to a better claims environment that would facilitate a reduction in claim costs.

The cost of insurance is a complex issue involving a number of parties, including Departments, State bodies and private sector organisations. My Department's review of policy in the insurance sector is being undertaken in consultation with the Central Bank of Ireland and other Departments and agencies and external stakeholders. The objective of the review is to recommend measures to improve the functioning and regulation of the insurance sector. The first phase of the review deals with the motor insurance compensation framework and this work is nearing completion. The next phase will deal directly with the issue of insurance costs and include an examination of the factors which contribute to the current rise in insurance premiums. The availability of relevant and timely data for the insurance sector to facilitate an in-depth analysis of the issues is also a matter to be addressed as the current lack of data presents difficulties from a policy analysis and development perspective.

The review of policy in the insurance sector will continue in the coming months and is expected to be completed by the end of the year. The final report will be presented to the Government in due course.

Photo of Michael McGrathMichael McGrath (Cork South Central, Fianna Fail)
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As the Minister rightly said, there is shared concern right across the House about the escalation in motor insurance premium costs. The official statistics from the CSO show increases of 34% in the past 12 months. Premiums are up by a whopping 60% since January 2014. I accept that the Government does not control motor insurance premiums. As the Minister knows, I have advocated for the reinstatement of the Motor Insurance Advisory Board which was very successful, but as outlined in his response, he has opted instead for a Department-led review. When the motor insurance element is completed - he signalled that he expects it to be completed shortly - could it lead to policy initiatives or will he wait for the entire review to be completed?

As the Minister indicated, the review is likely to be completed towards the end of the year.

2:20 pm

Photo of Michael NoonanMichael Noonan (Limerick City, Fine Gael)
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I will need to take advice on the issues the Deputy raises from the appropriate officials. I will contact him directly regarding the plans in that regard.

Photo of Michael McGrathMichael McGrath (Cork South Central, Fianna Fail)
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This issue cannot wait until the end of the year. Many factors are involved in the dramatic escalation in motor insurance premiums, including court awards, the need for a review of the Personal Injuries Assessment Board, legal costs, false and exaggerated claims, regulatory oversight and the lack of transparency regarding the profits earned by insurance companies. All these issues must be examined. While the industry has a role to play in this regard and must have its voice heard, the voice of consumers also needs to be heard. Deputies hear day in and day out about dramatic increases in motor insurance premiums. These increase are occurring across the board but younger drivers and the owners of older vehicles in particular are being hammered by increases in insurance premiums.

The current rate of increase is not sustainable as it will act as a drag on the economy and impact on the business community. We need to get to the bottom of the factors driving the increases and then tackle them. I encourage the Minister to arrange a further debate in the House as soon as motor insurance aspect of the review has been completed. I hope some degree of consensus would then be reached on the steps required to arrest the increase in premiums and hopefully reduce them.

Photo of Michael NoonanMichael Noonan (Limerick City, Fine Gael)
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I will discuss the Deputy's views with the officials involved in carrying out the review. I am not disposed to holding back any information and if there is useful information available, I will communicate it to Deputies.