Written answers

Thursday, 17 June 2004

Department of Enterprise, Trade and Employment

Insurance Industry

4:00 pm

John Bruton (Meath, Fine Gael)
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Question 68: To ask the Tánaiste and Minister for Enterprise, Trade and Employment if the urgent consultations on making employers liability insurance compulsory, promised in the Joint Programme, have yet been completed; the timing, scope, agenda and outcome of these consultations; and the decision the Government has taken arising from them. [17946/04]

Photo of Mary HarneyMary Harney (Dublin Mid West, Progressive Democrats)
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Extensive consultations have taken place with the social partners about the cost and availability of insurance. The consultations, coupled with the recommendations made by the Motor Insurance Advisory Board, resulted in the establishment of the Government's insurance reform programme. A comprehensive set of recommendations emerged following the MIAB report and consultations with the social partners. The question of making employers liability insurance compulsory did not emerge as an issue. The reform programme has focused on implementing the recommendations which emerged. The MIAB report was the most comprehensive study and analysis of the motor insurance industry ever undertaken in this country. The analysis, conclusions and recommendations extend to other areas of liability insurance, including employer liability insurance and provide a sound basis for addressing the problems being experienced in respect of insurance.

Photo of Jan O'SullivanJan O'Sullivan (Limerick East, Labour)
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Question 69: To ask the Tánaiste and Minister for Enterprise, Trade and Employment the progress made to date with regard to the implementation of her action plan for the insurance industry; and if she will make a statement on the matter. [18069/04]

Photo of Mary HarneyMary Harney (Dublin Mid West, Progressive Democrats)
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The insurance reform programme, which I announced on 25 October 2002, comprises a comprehensive set of inter-related measures designed to improve the functioning of the insurance market. I chair a ministerial committee established to drive the co-ordinated implementation of the reform programme across the relevant Departments and other bodies. Substantial progress is being made on a range of measures that will radically overhaul the functioning of the insurance market and help to tackle the high cost of insurance. The key measures include the implementation of the recommendations in the Motor Insurance Advisory Board's action plan within a target timeframe.

I wish to refer to the establishment of the Personal Injuries Assessment Board. The latter board was signed into law on 28 December 2003. The board was established and members appointed on 13 April 2004. The PIAB started to deal with employer liability cases from the 1 June last. I intend that it will commence dealing with motor and public liability claims from autumn 2004. A book of quantum — an aid for assessing the level of compensation based on the type of injury involved — which is essential for the successful operation of the PIAB was published by PIAB on 2 June 2004.

The Department of Enterprise, Trade and Employment and the Competition Authority have undertaken to conduct a joint study into the insurance market. The study will identify and analyse barriers to entry and limitations on rivalry in the insurance marketplace. The bulk of the study was completed in 2003 and a preliminary report and consultation document on competition issues in the non-life insurance market was published on 18 February 2004. Following consultation, a final report will be published later in the year which will contain recommendations based on the findings.

Significant progress has been made by the Department of Transport in the implementation of the road safety strategy. The introduction of the penalty points system has reduced the number of accidents on the roads, which has benefits far beyond the cost of insurance. Two new road traffic Bills are expected to be enacted by the end of July 2004. On 11 February last, the Minister for Justice, Equality and Law Reform published the Civil Liability and Courts Bill, which is before the Houses of the Oireachtas. The Bill contains measures to streamline the law in respect of personal injury claims, including measures to deal with fraudulent and exaggerated claims.

While EU law prohibits the imposition of price control on insurance, I have made it clear that I consider there to be an onus on the insurance industry to ensure that the reforms to be taken will have the effect of significantly reducing the cost of premia to consumers and businesses. Indications to date are that the reform programme is having its desired effect. The CSO publishes monthly indices of costs for a number of classes of insurance. The statistics show that there was a reduction of 12.9 index points, or 12.1%, in motor car insurance between the months of October 2002, when the programme was launched and April 2004, the latest month for which figures are available. Reductions are also beginning to occur in the cost of employers' liability and public liability insurance premia, which represent a significant burden for businesses. I expect further reductions to occur in all forms of insurance as the implementation of the reform programme continues. I am also confident that the measures the Government is putting in place to reform the Irish insurance market will attract new players into the market, leading to further downward pressure on premia.

Photo of Finian McGrathFinian McGrath (Dublin North Central, Independent)
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Question 70: To ask the Tánaiste and Minister for Enterprise, Trade and Employment the position regarding her Department's efforts to reduce the high cost of insurance. [18155/04]

Photo of Mary HarneyMary Harney (Dublin Mid West, Progressive Democrats)
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I am concerned about the difficulties that are being caused by high insurance premiums. The insurance reform programme, which I announced on 25 October 2002, comprises a comprehensive set of inter-related measures designed to improve the functioning of the insurance market. I chair a ministerial committee established to drive the co-ordinated implementation of the reform programme across the relevant Departments and other bodies. Substantial progress is being made on a range of measures that will radically overhaul the functioning of the insurance market and help to tackle the high cost of insurance. The key measures include the implementation of the recommendations in the Motor Insurance Advisory Board's action plan within a target timeframe.

I wish to refer to the establishment of the Personal Injuries Assessment Board. The latter board was signed into law on 28 December 2003. The board was established and members appointed on 13 April 2004. The PIAB started to deal with employer liability cases from the 1 June last. I intend that it will commence dealing with motor and public liability claims from autumn 2004. A book of quantum — an aid for assessing the level of compensation based on the type of injury involved — which is essential for the successful operation of the PIAB was published by PIAB on 2 June 2004.

The Department of Enterprise, Trade and Employment and the Competition Authority have undertaken to conduct a joint study into the insurance market. The study will identify and analyse barriers to entry and limitations on rivalry in the insurance marketplace. The bulk of the study was completed in 2003 and a preliminary report and consultation document on competition issues in the non-life insurance market was published on 18 February 2004. Following consultation, a final report will be published later in the year which will contain recommendations based on the findings.

Significant progress has been made by the Department of Transport in the implementation of the road safety strategy. The introduction of the penalty points system has reduced the number of accidents on the roads, which has benefits far beyond the cost of insurance. Two new road traffic Bills are expected to be enacted by the end of July 2004. On 11 February last, the Minister for Justice, Equality and Law Reform published the Civil Liability and Courts Bill, which is before the Houses of the Oireachtas. The Bill contains measures to streamline the law in respect of personal injury claims, including measures to deal with fraudulent and exaggerated claims.

While EU law prohibits the imposition of price control on insurance, I have made it clear that I consider there to be an onus on the insurance industry to ensure that the reforms to be taken will have the effect of significantly reducing the cost of premia to consumers and businesses. Indications to date are that the reform programme is having its desired effect. The CSO publishes monthly indices of costs for a number of classes of insurance. The statistics show that there was a reduction of 12.9 index points, or 12.1%, in motor car insurance between the months of October 2002, when the programme was launched and April 2004, the latest month for which figures are available. Reductions are also beginning to occur in the cost of employers' liability and public liability insurance premia, which represent a significant burden for businesses. I expect further reductions to occur in all forms of insurance as the implementation of the reform programme continues. I am also confident that the measures the Government is putting in place to reform the Irish insurance market will attract new players into the market, leading to further downward pressure on premia.

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