Seanad debates
Thursday, 6 December 2007
Motor Insurance
2:00 pm
Pearse Doherty (Sinn Fein)
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Cuirim fáilte roimh an Aire Stáit. I refer to the need for the Minister for Transport to introduce measures to reduce the exorbitant cost of motor insurance in this State, particularly for young drivers. It is clear that young drivers, who make up 20% of the total, are being bled dry and ripped off by some private motor insurance companies while the Government continues to look on. In a recent reply to a Sinn Féin parliamentary question on this issue, the Minister for Transport accepted that, "n the case of young drivers it has been represented that the cost of this insurance is still too high". The problem has been admitted and it is now high time that the Government acted to put an end to this rip-off of young drivers.
Young drivers, especially males, are forced to pay exorbitant prices for motor insurance. A significant number are forced into purchasing private cars in the first place due to inadequate public transport provision. The cost of motor insurance is a huge financial burden for many young people and their families. The most recent statistics available on this issue are contained in the Financial Regulator's report, Private Motor Insurance Statistics 2005. It showed that young male drivers between the ages of 17 and 20 holding provisional licences can pay up to €4,291 every year to be insured. Simultaneously, young female drivers in the same position can pay up to €2,381. The case has worsened in recent years. In 2002, a survey carried out of young male drivers aged 17 to 20 with provisional licences showed that the cheapest quote possible was €1,622. Three years later, in 2005, the cheapest quote possible was €2,082. This constitutes an increase of €420. The position has worsened and there has been little action to tackle it.
The National Youth Council of Ireland's report on motor insurance, entitled The Plunder Years, found that many young drivers are forced to pay insurance premiums by instalment as a result of high insurance costs. This form of payment incurs an interest charge of more than 18%, further hiking up the price. Motor insurance costs in this State are almost double the EU average. In addition there is inadequate regulation, information and research into the insurance industry.
What is the Minister of State's opinion on Sinn Féin's proposal to set up a State motor insurance scheme? A model exists in Canada, namely, the Manitoba Public Insurance Corporation in the province of Manitoba. This insurance company does not discriminate on age or sex. The only factors taken into account are the car one drives, what one uses it for, where one lives, one's driving record and the cover one wants. Quotes are much the same for everyone. New Zealand also runs such a scheme. These companies have proven their viability and contribute to better road safety through involvement in every aspect of road awareness projects.
It is unacceptable that young drivers are being discriminated against in respect of car insurance, thereby forcing some to become uninsured and an even bigger threat to other road users. Although young motorists are charged premiums that are not remotely reflective of the costs of actually insuring them, little has been done by the Government except to allow their continued exploitation. There is an obvious need for action. One such action could be the establishment of a State motor insurance company that would sell insurance at a fair price, rather than being set by market forces.
The National Youth Council of Ireland also suggested that drivers with an accident-free record should be entitled to a rebate funded by a levy on the profits of insurance companies. Through a State-run system, any profits accumulated could be used to offset the cost of providing insurance and to reduce premiums. Sinn Féin believes that affordable motor insurance should be available to every resident in the State, regardless of age, sex or marital status.
Tony Killeen (Clare, Fianna Fail)
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Third party motor insurance is required by law for the use of all mechanically propelled vehicles in a public place. Motor insurance is provided by private companies in an open and competitive market in which consumer interests can exert influence by seeking quotes and comparing costs before purchasing. Insurance companies, numbering 29 at present, are controlled by the Financial Regulator.
I am pleased to note that the Government's insurance reform programme, initiated in 2002, has resulted in cheaper and more widely available motor insurance. In general, the cost of motor insurance has declined by 11% in the last 12 months and overall, motor insurance premia have fallen by 39% since April 2003. Various factors have contributed to this reduction including increased competition in an open market.
Another major reform in this area was the introduction of the Personal Injuries Assessment Board. The PIAB continues to contribute to the lowering of motor insurance premia by eliminating the 46% additional cost associated with processing claims through the courts. Compensation claims are now settled much faster and at no disadvantage to the victim. Similarly, changes in the Civil Liability and Courts Act, which include penalties for giving false or misleading evidence in personal injury cases, have helped to reduce bogus claims.
Substantial progress has been made in the last two years in reducing the number of deaths and collisions. A significant reduction in the number of deaths on our roads took place in 2006 when the second lowest rate in 40 years, that is, 368 deaths was achieved. This downward trend has continued into 2007 with 308 deaths thus far, which constitutes 32 fewer deaths than the comparable figure on this day last year.
The Road Safety Authority has been established and has developed a new road safety strategy for the period 2007 to 2012, in co-operation with all the relevant Departments and agencies, as road safety is a major cross-cutting issue. There has been a substantial investment in new, improved and safer roads. Road safety policy initiatives and safety awareness campaigns have focussed on changing driver behaviour and on drink driving. Legislation has been enacted to enable roadside mandatory alcohol testing, MAT, a ban on the use of hand-held mobile telephones while driving, as well as the private operation of safety cameras to combat speeding. Since the commencement of MAT in July 2006, more than 30,000 drivers have been tested at checkpoints monthly. This testing, aligned with a significant increase in high visibility enforcement, increased penalties and the extension of penalty points has led to a substantial reduction in deaths despite the increased number of vehicles using our roads. Under the Road Traffic Act 2006, the powers of the Garda were also extended to allow the seizure of all uninsured vehicles whether registered within the State or otherwise.
In the case of young drivers, it has been represented that the cost of motor insurance is still too high. As with other types of drivers, the insurance industry assesses the risks involved and sets the premium level accordingly. Unfortunately, because of the high level of collisions and deaths involving young drivers, this group is assessed as being of high risk. This risk cannot be denied or ignored. Figures published recently by the RSA show clearly that young men in particular are consistently over-represented in collisions, fatality and serious injury statistics. There are several factors at play in this regard, including lack of experience leading to speeding and other dangerous practices. The abuse of alcohol and drugs while driving also contributes to the problem. A study of fatal road crashes in 2003 published by the Health Service Executive showed that driver alcohol is, primarily, a male problem with the highest risk group being those aged from 19 to 34. Likewise, young male drivers not wearing seat belts figure very prominently in fatality statistics.
Another reason for high premia is that young drivers are not able to establish a full no-claims bonus until they have been driving for at least five years. When all these issues are taken into account, it is difficult to envisage the insurance industry providing motor insurance cover to young people for the same premium level as for more mature drivers. Nevertheless, the Senator is aware that in the case of young female drivers, the premia are not as high. This difference in treatment is due to the reduced risks involved as perceived by the insurance industry.
Under the social partnership agreement, Towards 2016, the Government gave a commitment to review the cost of motor insurance for young drivers. My Department appointed external consultants in September 2007 to examine this matter. The report, which I expect to receive shortly, should inform us better of the issues involved. I advise both mature and young drivers to shop around and take advantage of the competition within the market when seeking new insurance or renewing an existing policy.
Pearse Doherty (Sinn Fein)
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I welcome the Minister of State's reply although it did not address the issue. I am aware of the risks associated with young drivers but 20% of them cannot be penalised without even having a bad record. Will the consultants carrying out the review on behalf of the Department discuss the problems with youth organisations? Young people are being ripped off though massive premia, which even the Minister of State acknowledged are high.
Tony Killeen (Clare, Fianna Fail)
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There has been a 39% reduction in premia over a relatively short period. I will raise the other matter with the Minister and ask him to correspond directly with the Senator.