Paschal Donohoe (Dublin Central, Fine Gael) | Oireachtas source

I thank Senator Kelly for raising this matter with me today.I should clarify that the Motor Insurance Advisory Board, MIAB, was not originally established by my Department, nor do I have a legal role in that area or the re-establishment of the board. The MIAB was originally established under the Motor Insurance Advisory Board Act 1984, introduced by the then Minister for Industry, Trade, Commerce and Tourism.

My responsibilities, as Minister for Transport, Tourism and Sport, in relation to motor insurance are limited to the requirements under the Road Traffic Acts relating to compulsory insurance for drivers of mechanically-propelled vehicles. To that end, I have responsibility for the current agreement with the Motor Insurance Bureau of Ireland, MIBI. This body was established in 1995, having as its principal role the compensation of victims of road traffic collisions caused by uninsured and unidentified vehicles. It is regulated under the terms of an agreement with me, as Minister for Transport, Tourism and Sport. The most recent such agreement is that of 2009. It is funded by all insurance companies underwriting motor insurance in Ireland, which must by law be members of MIBI and contribute to funding the claim in proportion to their market share.

The area for which I have direct responsibility relates to motor insurance costs and the impact they have on road safety, which is my responsibility. On the broader point the Senator has raised, to which I want to respond, I am aware of the clear trend to which he refers, whereby there have been increases of between one fifth and one third in many premia within the motor insurance market in the last 12 months. The motor insurance industry itself is pointing to a number of factors that are causing this, such as the frequency and scale of claims and the cost of those claims. It is also making some observations about the operation of the insurance market and the particular requirement under the solvency II directive from January of next year for insurance companies to increase their capital reserves, which could be a contributory factor in some of the premia to which the Senator refers.

The Central Bank is the regulatory body in respect of all this, but it is only able to issue directions to firms in respect of where they price, how they operate and whether any decisions they make would risk the sustainability of the company as a going concern and then cause further issues for policy-holders. I have met and engaged with representatives of the insurance industry regarding this matter and I believe the Department of Finance, along with the Central Bank, will be reviewing the circumstances that led up to the issues with Setanta Insurance, which have also been a contributory factor in this matter. They will then report back to the Minister for Finance to see what can be learned from this and whether anything can be implemented to deal with the matters the Senator is referring to.