Seanad debates
Thursday, 14 July 2016
Commencement Matters
Motor Insurance
10:30 am
Maura Hopkins (Fine Gael)
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I welcome the Minister of State to the Chamber this morning. I want to raise the issue of insurance costs. The spiralling cost of motor insurance has placed a massive burden on motorists. Over the past year, increases in excess of 30% have become standard within the sector and that is unacceptable. I am fully aware that the Minister for Finance has set up a task force to examine the issue and undertake a review of policy in the insurance sector. It is important that this report and the recommendations be made available and actioned without delay.
I know of many people of all ages who have found it extremely difficult to pay their car insurance. It is an issue that disproportionately affects rural areas. Many people who live in rural areas must travel a distance to reach work and do not have the option of public transport. The only mode of transport available to them is the car. Last week, I met a young person who had been quoted in the region of €3,000 for her annual premium. She must pay it to get to work. For every €10 she earns, as much as €1.70 goes to pay her car insurance. This is scandalous and it does not make work pay for her. This issue is also crippling businesses because they are finding it extremely difficult to keep lorries, buses and vans on the road due to the high cost of insurance. The issue needs to be dealt with as quickly as possible because it has had a major impact on overhead costs. If the Government is committed to revitalising rural towns and villages and achieving its target of creating 135,000 jobs outside of Dublin, then it is critical that we tackle the issue of motor insurance.
I call on the Tánaiste and Minister for Justice and Equality to ensure that additional resources are diverted to the traffic corps to make sure that we have improved enforcement. An Garda Síochána needs to have access to a computer system where the analysis of each number plate will provide insurance details in real time. We need insurance companies to provide verified statistical analysis as to why it is very difficult to receive a quote for cars older than ten years that have passed the NCT.
Dealing with accident claims through the courts system has proved to be very expensive because the costs have been passed on to the consumer in the form of higher insurance premia. At present, it is far too easy to bypass the Injuries Board. Mechanisms need to be put in place to ensure that the board is fit for purpose and that it limits the number of claims that end up in the courts system. The book of quantum, if used more extensively, would provide standard amounts for specific injuries. I ask the Minister of State to outline what interim measures are being implemented while we await the findings of the task force. I also ask that these findings would be actioned as quickly as possible.
Eoghan Murphy (Dublin Bay South, Fine Gael)
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I thank the Senator for raising this issue. I welcome the opportunity to discuss in the Seanad the important matter of the cost of insurance and to highlight the actions the Government is currently taking to address the issues.
An adequately reserved, cost-competitive insurance sector is a vital component of economic activity and financial stability. The current high cost of insurance is a concern for the Government. I know it is a concern for the Senator and citizens. I also know that it is an important element for job potential and creation outside of Dublin and, indeed, in all parts of the country.
While the provision and pricing of insurance policies is a commercial matter for insurance companies, this does not preclude the Government from introducing measures which may, in the longer term, lead to a better claims environment. Different reasons have been put forward by various interested parties to explain Ireland's current increasing insurance costs. Motor insurance appears to be particularly affected, with the cost of premiums increasing significantly in the past 12 months. Reasons often presented include the increased level of insurance claims and the increasing value of compensation awards. Insurance fraud is also considered to be a contributory factor. Others have highlighted that the highly competitive nature of the domestic market for non-life insurance in recent years has begun to impact on firms' underwriting profitability, with underwriting losses reported for a number of high-impact firms. This has been compounded by the fact that investment returns that have traditionally compensated for underwriting losses are currently very low due to the existing low interest rate environment.
To examine these issues in more detail and assess the options for the Government, the Minister for Finance has established a task force in his Department to undertake a review of various aspects of policy in the insurance sector.An important element of this review is an assessment of the factors contributing to the increasing cost of insurance. This work will be progressed through a working group on the cost of insurance, of which I will be chairman. The working group consists of representatives from all relevant Departments and agencies and will consult with relevant stakeholders. The aim of the review is to try to identify measures that can reduce the costs of insurance in the short term and also on a more long-term basis. Among the issues to be examined is data availability to inform policy in this area, taking into account what information or data is required to be in place, what is currently available and what will be provided through the introduction of Solvency Il, and to identify any shortfalls. Options such as a national claims register and motor insurance policy database will be evaluated.
This is a complex area. It would appear that there are a wide range of factors contributing to the increased cost of insurance. The purpose of the review is to identify credible and sustainable solutions that take account of the nature of the problem as it affects consumers in the form of higher costs. However, it is also important to develop a solution that facilitates an increase in the capacity of the market. Moreover, it is necessary to take account of the fact that we want a well-capitalised and robust insurance sector, and this must be reflected in the final outcome of our deliberations. The latter point is essential if we are to avoid the risk of unrealistic competition on price as companies try to gain market share at the expense of their underlying solvency.
It is my view that even short term solutions to address the cost of motor insurance need to be considered by the review group as part of a comprehensive package of reforms. Failure to do this could compound an already difficult market position, with the risk that Ireland would become a more unattractive place to conduct this type of business if the situation is not fully thought through. The review will be completed over the coming months. I have noted the Senator's proposal for the Tánaiste and Minister for Justice and Equality, Deputy Fitzgerald, which we will also consider.
Maura Hopkins (Fine Gael)
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I thank the Minister of State for his response. It appears the working group will take the issue of motor insurance costs seriously, as it must if we are to remove all possible barriers for people who are trying to work, which is a major issue in rural areas. The issues around fraud, claims and more extensive use of the book of quantum are core elements in addressing this matter. I look forward to the publication of the report in the coming months. This is a major issue and short term measures need to be put in place to support people. Motor insurance is compulsory; it is a legal requirement. People do not have options in that regard, so we need to ensure it is affordable. Currently, the cost of meeting motor insurance requirements is making things very difficult for people.
Eoghan Murphy (Dublin Bay South, Fine Gael)
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The work that will be undertaken on insurance costs fits with the programme for Government commitment to a fairer country and a fairer society in Ireland. I know that is what at the core of the Senator's motivation in raising this issue. Certain groups of people are particularly affected by the increase in insurance costs. I can assure the Senator that the working group, which I will chair, will undertake to conclude its work as soon as possible. Following completion of the review, we will consider what recommendations can be implemented immediately and what recommendations are more long-term in terms of implementation. The working group is tasked with examining what drives the cost of insurance, making short-, medium- and long-term recommendations and progressing the issue of dealing with increasing insurance costs, taking account of the requirement for an economically vibrant and financially stable insurance sector. I will bring an interim report to the Minister before the end of this year. The Departments and agencies involved in the group include the Department of Finance and, under its aegis, the Central Bank of Ireland; the Department of Jobs, Enterprise and Innovation and, under its aegis, the Personal Injuries Assessment Board and the Consumer Protection and Competition Commission; the Department of Transport, Tourism and Sport and, under its aegis, the Road Safety Authority; and the Department of Justice and Equality and, under its aegis, the Garda Síochána and the Courts Service. The group will also consult with external stakeholders, including the insurance industry, and those sectors of the economy that are significantly influenced and affected by rising insurance costs. My intention as chairman of the group will be to bring a report to the Minister for Finance before the end of this year.