Emmet Stagg (Kildare North, Labour)
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Question 21: To ask the Minister for Transport his views on the implications for road safety of proposals by motor insurers to increase motor insurance costs by 10% even though motor insurance prices increased by 15% over the past year according to the Central Statistics Office and the number of road collisions and fatalities continues to fall; if he is liaising with the Department of Enterprise, Trade and Employment regarding same in view of the recent road safety gains and allegations that motor insurers are loading motor premiums with premiums from flooding and other non-motoring insurance claims; and if he will make a statement on the matter. [39553/09]

Noel Dempsey (Meath West, 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 where consumers interests can exert influence by seeking quotes and comparing costs, before purchasing. Insurance companies, numbering 29 at present, are regulated by the Financial Regulator.

Motor insurance costs as measured by the CSO have increased by 15% from September 2008 to September 2009, after a historic decline in costs over a five year period from March 2003 to February 2008 of nearly 40%. The cost of motor insurance in 2009 still remains at 31% below the prevailing rate in 2002. Motor insurance companies in Ireland insure vehicle drivers rather than vehicles. This enables them to calculate the risks associated with specific drivers and thereby price the insurance premium accordingly. The factors taken into account when calculating the risk include the age, gender and driving experience of the driver, the engine size of the vehicle and its usage together with the address at which the vehicle is based.

The cost of uninsured driving amounts to approximately 6% of motor insurance claims and also adds to the cost of the average motor insurance premium, as does the likelihood of an increase in fraudulent or exaggerated claims during a recessionary period. There has been a significant increase in the cost of claims paid out. The gross incurred cost of motor claims in 2008 increased by 24% when compared to 2007.

Likewise, subsets of drivers with apparent higher risks pay higher premiums, for example young male drivers, because of the high level of collisions and deaths involving this group. Premiums for young female drivers are lower. This difference in treatment is due to the reduced risks involved, as perceived by the insurance industry. This system also enables a specific driver to establish a no-claims status over a number of years. It is always advisable for 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.

The Office of the Financial Regulator is better positioned to examine and comment on whether any cross subsidisation is taking place across other types of non life insurance. That office receives returns from all the companies operating in Ireland. The Financial Regulator operates under the aegis of my colleague, the Minister for Finance.