Michael Ahern (Cork East, Fianna Fail)

I thank all Senators who contributed to this debate. Many of them were reasoned and some were slightly excitable but it made for an interesting afternoon.

In my closing remarks, I will highlight the pertinent points of my opening address. The Government welcomes the publication of the Competition Authority report on competition issues in the non-life insurance market, which is a preliminary report and a consultation document. The undertaking of a study on competition in the insurance market is one of the recommendations of the MIAB report and is a key element of the reform programme.

The insurance reform programme comprises 67 recommendations of the MIAB report and 32 of these have already been implemented. The MIAB action plan and a ministerial committee monitors the progress of the implementation of these 67 recommendations.

The MIAB action plan covers a broad spectrum of activities which impact on the insurance market. It includes measures aimed at improving the law on personal injuries. The Civil Liability and Courts Bill has been published and is soon to be before the Houses of the Oireachtas and the legislation to establish the Personal Injuries Assessment Board was signed into law in December 2003. Significant progress has been made on the logistics with a view to the PIAB hearing cases by the middle of the year.

On implementing and enforcing the Road Traffic Acts, penalty points have been introduced by the Minister for Transport and a new road safety strategy statement is expected shortly. On providing greater transparency and protection to consumers, IFSRA set up a one-stop website on 26 November 2003 and published its code of practice for insurers in December 2003. On the provision of greater information to the consumer, IFSRA published the first set of its three monthly comparative tables showing motor insurance quotations in December 2003.

It is the Government's firm intention to continue to implement the measures in An Agreed Programme for Government which relate to tackling the high cost of insurance, and to implement any recommendations which result from the final findings of this study by the Competition Authority. The authority has identified some specific issues which give rise to competition concerns with regard to barriers to entry and rivalry in the insurance market. These concerns are being explored further in a public consultation process which will last for two months.

As regards insurance brokers, competition concerns for further consideration include the existence of ad valorem or fixed percentage fees which do not appear to have been computed downwards despite rapid increases in underlying premiums; the possibility of conflicts of interest arising from, on the one hand, the obligation to provide best advice to the client and, on the other, incentives from insurers, including overriding commissions related to quantity of sales and minimum thresholds of business; and a lack of transparency in that buyers do not necessarily know what incentives and commissions the broker may receive or which insurers the broker has contacted on their behalf.

As regards insurers, several issues of concern for further consideration have been identified. With regard to data sharing on lost statistics which helps to assess risk and calculate premiums, questions have arisen about the extent, timeliness, availability and reliability of data, all of which need to be explored further. With regard to the funding and handling of claims arising from uninsured and untraced drivers and the method of operation of the declined cases agreement, suggestions are being sought as to whether changes could be introduced which would deal with competition concerns. On solvency requirements for insurance companies, the policy of setting higher margins for new entrants than for existing companies is being examined further to ascertain whether it acts, in practice, as a barrier to entry.

The comments of Senators are welcome and will be taken into account by the Competition Authority in the public consultation process. This process will conclude on 18 April next, after which the authority will prepare a final report and recommendations which it aims to conclude during the summer.