Lucinda Creighton (Dublin South East, Independent)
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255. To ask the Minister for Finance if he shares the concerns of the Central Bank of Ireland that the insurance industry is taking on excessive losses in order to compete for new motor insurance customers; if he envisages tighter regulations or legislative changes that will be required to correct this; and if he will make a statement on the matter. [11193/15]

Michael Noonan (Limerick City, Fine Gael)
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I am aware that the Central Bank is reported to have raised a concern that intense competition between insurers may be driving down premium prices to levels that may not be viable.  The status of this report is unclear.  My Department is in correspondence with the Central Bank to clarify their views.

In my role as Minister for Finance I have responsibility for the development of the legal framework governing financial regulation. Neither I nor the Central Bank of Ireland, as regulator, interfere in the pricing of insurance products.  The provision of insurance cover and the price at which it is offered is a commercial matter for insurance companies and is based on a proper assessment of the risks they are accepting and the making of adequate provisioning to meet these risks. 

The EU framework for insurance expressly prohibits Member States adopting provisions requiring the prior approval or systematic notification of certain matters including general and special policy conditions and scales of premiums. Furthermore, in the context of non-life insurance, the EU framework provides non-life insurers with the freedom to set premiums, as has been acknowledged in case law by the European Court of Justice (Case C-518/06).

While price competition is to be welcomed in a functioning competitive market, it is important that it is based on a sustainable business model and is not at the expense of the prudential soundness of insurance companies nor at the expense of consumer protection.  It is the role of the Central Bank, as regulator, to ensure that this is the case.  This includes the power to insist on adequate reserves.

The Central Bank is responsible for the authorisation and prudential supervision of insurance undertakings authorised in Ireland.  The Central Bank of Ireland also has responsibilities in relation to:

- Branch establishments of European Economic Area (EEA) authorised Non-Life Insurance undertakings

- EEA authorised Non-Life Insurance undertakings conducting business by way of services

- Third country branch establishments i.e. a branch of an insurance undertaking whose head office is locates outside the EEA 

The powers of the Central Bank of Ireland have been enhanced significantly in recent years to ensure that it can bring certainty to the financial position of any firms of concern and to undertake any early intervention measures it considers appropriate.