Bernard Durkan (Kildare North, Fine Gael)
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Question 132: To ask the Minister for Finance the extent to which he has monitored insurance premium costs in 2009; and if he will make a statement on the matter. [44996/09]

Bernard Durkan (Kildare North, Fine Gael)
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Question 170: To ask the Minister for Finance the extent to which he has monitored or observed fluctuations in all forms of insurance premiums in 2009; the full extent of increase or decrease in each sector; the reason for such changes; the extent to which the valuation of the items or property insured has increased or decreased in 2009; if he expects further changes in this area; and if he will make a statement on the matter. [44460/09]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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I propose to take Questions Nos. 132 and 170 together.

The questions cover the same general issue. I am aware there has been an increase in insurance premiums this year including motor insurance premiums. This increase however has to be considered against a backdrop of the continuing stress in the financial markets and the recessionary pressures in the economy which is affecting all financial service providers including the insurance industry.

While the Financial Regulator does not maintain statistics on price increases in the insurance sector, or the extent to which the valuation of the items or property insured has increased or decreased in 2009, it has provided some background as to why insurance prices have increased in these deflationary times. It has advised me that while the non-life insurance market performed well up to the end of 2006, market sources indicate that much non-life business was written at a loss in 2007. This trend continued in 2008, but the companies were still willing to write business at a loss in order to maintain their market share. They were able to do this as a result of the reserves they had built up during profitable years. However, the situation could not go on indefinitely and indications are that firms are now taking action on pricing to underpin their financial positions.

This position is supported by a report published earlier this year by Standard & Poor's titled 'A Testing 2009 for the Irish Non-Life Insurance Market, Despite Fundamental Strengths'. It provides an insight into the problems facing the industry at the moment. The report envisages a difficult year for the non-life industry as a result of rising claims and continuing intense competition which they say is limiting price increases. They add that this combined with anticipated lower investment returns is expected to hinder profitability.

In the current difficult trading climate, there is a delicate balance to be struck between ensuring the long-term sustainability of the non-life insurance industry and at the same time making sure that the consumer obtains good value for money. I am particularly conscious of the impact of a significant increase in premiums for both the consumer and business and I have informed industry that it must be a priority for them to ensure that insurance cover is provided as competitively as possible consistent with long term commercial sustainability and viability.

Finally, the issue of further changes in pricing will be determined largely by the level of claims that the insurance industry receives as this ultimately is the main driver behind price increases.