Written answers

Tuesday, 16 November 2004

Department of Enterprise, Trade and Employment

Insurance Industry

9:00 pm

Photo of Michael D HigginsMichael D Higgins (Galway West, Labour)
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Question 125: To ask the Minister for Enterprise, Trade and Employment if he has satisfied himself at the reported reduction in the level of insurance premiums in view of figures showing that Irish insurance companies are now making substantial profits; and if he will make a statement on the matter. [28335/04]

Photo of Micheál MartinMicheál Martin (Cork South Central, Fianna Fail)
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My Department no longer regulates insurance companies as this responsibility has passed to the Irish Financial Services Regulatory Authority, IFSRA, under the aegis of my colleague, the Minister for Finance, who has overall responsibility for policy and legislation on the provision of financial services in Ireland. The Minister for Transport has taken over the lead role in policy and legislation on the availability and cost of motor insurance and any related interdepartmental co-ordination. The Central Statistics Office's consumer price index statistics show that there was a reduction of 20.8 index points, or 19.3%, in motor car insurance between the months of April 2003 — when the cost of private motor premia peaked, index 108.0 — and September 2004, which is the month for which the latest figures are available, index 87.2.

While the CSO index is based on averages, individual policy holders have done much better as can be seen from data provided by the Motor Insurance Advisory Board. Examples provided by the board for three specific companies between March 2003 and March 2004 indicate the following reductions: 10% to 16% in comprehensive insurance for a 30 year old male; 10% to 41% in comprehensive insurance for a 50 year old female; and 10% to 45% for third party, fire and theft insurance for a 21 year old male.

IFSRA has conducted a number of cost surveys on motor insurance and proposes to undertake cost surveys for public liability and employer liability. The pricing and underwriting of insurance is a matter for individual insurance companies. EU law prevents Governments from intervening directly in relation to premium levels. However, Governments are free to take measures to improve the operation of the insurance market. Recent measures taken under the Government's insurance reform programme have led to a better functioning insurance market. This is reflected in the significant underwriting profits reported by IFSRA in its first insurance statistical review in October 2003. The review was previously published by my Department. The new operating conditions enhance the attractiveness of the market to prospective entrants.

While the premium reductions we have seen to date are welcome, I expect further premium reductions from the new market conditions now in place. Competition from new entrants attracted by better market conditions will be an important element in ensuring continuing downward pressure on premia. The recent authorisation of five new entrants to operate in the Irish market will make a further important contribution in this regard.

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