Gerry Horkan (Fianna Fail) | Oireachtas source

I welcome the opportunity to debate the report of the Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach on the rising cost of motor insurance and the report of the working group on same. Almost immediately following the establishment of the aforementioned Oireachtas committee last June, the unsustainable rising cost of motor insurance was identified as an urgent issue for the committee’s attention. I serve as Vice Chairman of that committee and it is fair to say that the Chairman, Deputy John McGuinness, and its members, including Senator Kieran O'Donnell and others, did a lot of in-depth work on the issue of motor insurance. The committee engaged with many different stakeholders over many meetings and produced a very good report last November, much of which dovetails with the Minister of State's working group report.

The rising costs of insurance were confirmed by CSO figures which, over a three year cycle, showed increases of up to 70%, with many consumers experiencing even higher increases. We all know that the rising cost of motor insurance continues to have a very negative impact on Irish society. We also know that this rate of price increase is not sustainable and, in the opinion of the Oireachtas committee, not justified. The cost of motor insurance poses a risk to national competitiveness and the performance of the overall economy at a time where the country is facing other serious challenges which are beyond our direct control, including the possible impacts of the US Government's policies on foreign direct investment, FDI, and of Brexit. The high cost of motor insurance - and insurance generally, which we are not discussing today but which is being discussed by the Oireachtas Committee- must be tackled.

As one of its first tasks, the joint committee undertook to examine and establish the underlying factors contributing to the rising costs of motor insurance and to make recommendations to reverse this trend. The committee held a series of public hearings on the matter. As Vice Chairman, and on behalf of the joint committee, I would like to thank all the witnesses who came before the committee and for their respective contributions. I also wish to thank the wider public, many of whom contacted the committee and supplied submissions on this issue. This evidence gave the committee valuable information and insight on this very critical issue which impacts directly on Irish citizens and businesses.

The importance of the public nature of the committee hearings cannot be overstated. It meant that members of the public could hear first-hand from the main players and draw their own conclusions. It is the job of public representatives to represent citizens and during these hearings the committee heard, time and again, of the impact on citizens of the rising cost of motor insurance, with young and older drivers feeling particularly targeted. The committee heard that other safe drivers had also experienced inexplicable price increases which were completely unrelated to their driving records. My experience, and doubtless that of many of the other committee members, was one of frustration at the end of the public hearings on this issue. Having reviewed extensive documentation and heard from a range of perspectives, the committee identified many factors as contributing to the huge price increases in insurance premiums, such as the frequency and cost of claims, fraud, operating losses of insurers, legal and regulatory factors, including insolvency issues, and the need to reform the PIAB. However, it remains my opinion that another critical factor is the lack of transparency of and access to insurance data, particularly data on claims.

The committee repeatedly heard that 10% of claims end up in court, 20% are adjudicated through the PIAB and the remainder are never seen by anyone other than the insurance companies and individual claimants. The committee also discovered that there had been no significant increase in the cost of the claims paid out by the courts or the PIAB. Therefore, we have to believe, on the basis of what we heard from the insurance companies and in the absence of any independent method of measurement, that all of the increase in premiums relates to the 70% of claims that are settled outside of the formal settlement systems. We also heard about losses incurred by the insurance companies in the past, solvency ratio changes, administrative inefficiencies and so forth. The lack of transparency and of access to insurance data is absolutely critical and must be dealt with properly.

In that context, I welcome the speech from the Minister of State, Deputy Eoghan Murphy. I also welcome the time he has devoted to this issue. The Minister of State is a man of great integrity who is doing his very best on this issue.I can speak from personal experience. The Minister of State might be lucky in that my insurance policy was up for renewal. The premium went from €390 to €520 last year, an increase of exactly one third. It had increased from €330 to €390 the year before and was below €300 the year before that. This year it came in at €820. That quote was for the same car and driver with no claims or penalty points. I managed to get it back down to €580 after discussing it with the insurance company, but it is still an iincrease of more than 10%. However, it is not the €300 increase that it would have been otherwise. If I am seeing these increases, I imagine many other consumers are too.

This issue is urgent. It is all well and good to say we do not want to have water charges or increases in property tax. However, these increases are major and affect people on a daily basis. They are far greater than any being suggested in the television licence fee or water charges, if we had to pay them. They need to be tackled at an aggregate level. We need to understand what is going on.

I am Vice Chairman of the Joint Committee on Public Expenditure and Reform, and Taoiseach. The committee made 71 recommendations, far too many to outline in detail in the two minutes I have left. While some of them would be relatively easy to implement, others would require detailed consideration. Greater transparency is crucial. We have recommended that the insurance industry give raw data and that the Government collect them. The Minister of State alluded to how a database would be set up and managed. I hope that over time it will show us the blips and the issues that need to be tackled. I also hope it will encourage new competition. We hear that competitors have no wish to come here because the market is too unpredictable. They believe they would be paying for the losses of companies that folded and so on. That issue needs to be looked at.

The report also recommends the greater sharing of data between the insurance industry and the various statutory agencies. It recommends that consumers receive greater detail in renewal documents. An increase in the powers of the Personal Injuries Assessment Board is important. We talk about the book of quantum being important, but we need to understand it is simply an historical document reflecting what has been paid out. It should not be a target in the sense of future claims being the same as previous ones. We have heard much about the change in the discount rate. Equally, we have heard of solvency ratios. Customers need to understand why their premiums are going up. However, they do not and cannot because the documents simply state what the premium was and what it will be. We need to understand why. I realise this is not within the remit of the Minister of State. Apparently, road safety was not within the remit of the Minister for Transport, Tourism and Sport when he was before the House. Road safety and the enforcement of existing rules need to be dealt with, although I realise they are matters for the Department of Justice and Equality. People need to know. If there are fewer and less severe claims, there should be smaller pay-outs. That is basic mathematics. We need to ensure people are driving more effectively, whether by way of putting alco-locks on the cars of those who have been convicted of drink driving, tachographs in ordinary cars to track what the drivers are doing or using similar technology. I imagine technology to track people while driving is already in existence. It simply needs to be used.

I hope our report can contribute to reform of the motor insurance sector. We have engaged with the Minister of State. It is important that the Minister come back to the committee on a quarterly basis to discuss and tease out what is happening. This is a vital issue. I was the person who requested that the matter be debated in this Chamber because it had been discussed in the other Chamber on the day the Department's report was published. It is important to have this debate. I look forward to working with the Minister of State, his officials and the committee to try to ensure insurance premiums will not simply stay the same but fall over time. They should fall because less is being paid out.