Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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6. To ask the Minister for Finance if he will consider setting up a State insurance company in order to ensure that the current prices of motor and other insurance are curbed; and if he will make a statement on the matter. [27593/16]

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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As the Minister of State and everybody is aware, drivers have been absolutely crucified by enormous increases in car insurance premiums. Overall, they have increased 20% in the last year and are expected to go up another 25% next year. In some categories, it is off the Richter scale. One of the groups that asked me to give a shout out for it is taxi drivers. Huge numbers of taxi drivers simply will not be able to continue doing their job. Then there are young people, people with older cars - one can go through the list. Is it not time to consider a public not-for-profit State insurance company rather than relying upon a failed private insurance industry?

Eoghan Murphy (Dublin Bay South, Fine Gael)
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In Ireland, the provision of insurance through private companies has been the norm for a long time. This is an operational model which has in general been shown to work well and efficiently. It is acknowledged that over the last 18 months or so, there have been some difficulties with aspects of the system, particularly in relation to the availability and cost of motor insurance. However, a State-owned company would have to operate subject to the same prudential rules as a private company and there is no basis to conclude that the same problems would not periodically arise with this model. In addition, there would be significant capital costs for the State.

The Government has in the past examined the introduction of a scheme of State indemnification in the flood insurance sector. However, this approach was not considered financially viable because it was concluded that over time it would distort the market and could incentivise the insurance industry to discontinue the provision of insurance cover in medium and high risk areas. This would make the cost of such a scheme prohibitive. Furthermore, potentially complex regulatory implications would need to be examined in detail in consultation with the Central Bank of Ireland and the Office of the Attorney General.

In relation to the current difficulties in the market for motor insurance, the cost of insurance working group, which I chair, is undertaking a review of the factors which are influencing the increased cost of motor insurance. The working group brings together all of the relevant Departments and offices involved in the process. Its objective is to identify immediate and longer-term measures which can address increasing costs, while bearing in mind the need to maintain a stable insurance sector. By the end of October, the working group will provide the Minister for Finance with an update report which will set out the priority actions required. From November to December, the working group will develop an action plan to enable the relevant Government Departments and offices to commence the implementation of these priority actions. In this regard, I will be consulting regularly with Government colleagues and also with the Oireachtas.

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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I want to shift the terms of the debate towards looking at a public not-for-profit State-led model. Frankly, I believe the Government is being led by the self-serving propaganda of the private insurance industry. The notion that competition in the private insurance market would produce lower premiums has been proven absolute nonsense. It is exactly their competitive drive for market share and, ultimately, profit that has caused this problem. They are now trying to recover lost profits because of the madness of that blind competition as well as the collapse of Setanta Insurance, Quinn Insurance, all the massive waste on advertising and profit-taking generally. I put it to the Minister of State that we need to look at other models. One he could look it is in Manitoba in Canada which has some of the lowest driver premiums anywhere on the American continent. That model was set up precisely because premiums went through the roof in the same way as they have in our private insurance sector. A parliamentary committee was set up, representations were made, they set up a public insurance company and it has worked. I believe we need to look at that because it has ended up cheaper and better for everybody.

Eoghan Murphy (Dublin Bay South, Fine Gael)
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I do not want to get ahead of the potential recommendations of the working group, but we are looking at the operations in other jurisdictions and different models that are happening in Canada, New Zealand and Australia. We are also looking at new ideas like peer-to-peer insurance. We are looking at everything and I am not going to pre-judge the outcome of what we are doing. Setting up a State insurance company would take time and we need to look at the current problems, as the Deputy pointed out in his question. We need urgent action on that and are looking at short, medium and longer-term solutions.

We have not finished our work yet but I will give the Deputy an idea of some of my thinking on a State insurance company or even a State insurance model with no private actors. Establishing a State insurance company would not lead to any reform in the market. It might reward bad behaviour that is already in the market. What we would see then is people who are already withdrawing out of riskier parts of the market withdrawing further, leading to an increased cost for the State and expediting that problem. The State would face the same problems that are already there in relation to provisioning and concerns about uncertainty around the cost of claims. Those problems would not go away with a State insurance company. We have to ask who would pay the difference between the market price and the discounted rate being given by the Government. Where would that money come from? Would it come from the taxpayer again? I do not think we can put any more of a burden on them. However, we are looking at other jurisdictions and I am keeping an open mind as to what might come from our investigations into those areas by the relevant sub-group that is doing that work.

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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There is an assumption behind that that what the private insurance companies are doing with premiums is justified. They are putting a whole case forward on to that. I do not accept it at all. In fact, the number of fatal and non-fatal collisions in this country has fallen substantially. There are not more accidents. There are serious problems of transparency around the finances of private insurance companies. I put it to the Minister of State that it is actually to do with bad investments by these companies and by a crazy and competitive drive for market share. In other words, it is the fault of the private insurance companies and their pursuit of profit that has caused the problem, as well as the collapse of Quinn Insurance and Setanta Insurance and other things. Legal costs have certainly been an issue although I do not think they are the major factor. The costs of all of these things and others such as needless advertising could be eliminated with a public insurance company. I ask the Minister of State to look particularly at the category of taxi drivers who are being run out of business and will not be able to continue unless we do something about this.

Eoghan Murphy (Dublin Bay South, Fine Gael)
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On the Deputy's final point, we are looking at the issue of taxi drivers. We are meeting with every interest group that we can, either in the plenary session where we met with the hauliers earlier this morning as well as representatives of the car rental companies, or with taxi drivers, with whom we are meeting tomorrow, I think, or possibly later in the week. I am not going to be led by the industry. One of the big problems we have at the moment is transparency from the industry as to exactly what is happening, be it in relation to the claims process, the cost of claims or how they are calculating premiums. We are trying to get that information at the moment. What we are identifying through our plenary meetings and sub-groups are some honest brokers who are willing to share with us their information in an objective way so that we can get a proper sense of the picture ourselves. We will use that information to try then to build consensus around what the actual problems are and use that information to build consensus around what the solutions might be. Transparency will be the core of it as well as getting the information out into the public domain. I also have a fear that the lack of transparency is creating problems when it comes to competition and I have raised that with the Competition Commissioner myself.