Tommy Broughan (Dublin North East, Independent)
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323. To ask the Minister for Finance if he has requested the Central Bank of Ireland, as regulator of the insurance industry, to report to his Department and the Houses of the Oireachtas on the massive increase in car and other insurance costs during 2015; and if he will make a statement on the matter. [38016/15]

Michael Noonan (Limerick City, Fine Gael)
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As Minister for Finance, I am responsible for the development of the legal framework governing financial regulation.  The Central Bank of Ireland, as regulator, is responsible for prudential supervision of insurance companies.

It is important to note that the provision of insurance cover and the price at which it is offered is a commercial matter for insurance companies and is based on an assessment of the risks they are willing to accept and adequate provisioning to meet those risks.

Under the Central Bank Act 1942 (as amended), the Central Bank of Ireland is accountable to the Oireachtas in the exercise of its regulatory functions and is required to prepare an annual statement for the Oireachtas relating to its performance in regulating financial services.  As Minister for Finance, I do not have the power to direct the Central Bank to report to the Oireachtas.

Section 6A of the 1942 Act provides that the Minister for Finance may, from time to time, request to consult with the Governor of the Central Bank, in relation to a range of matters, including the stability of the financial system.  In July this year, I wrote to the Governor of the Central Bank under Section 6A of the Act seeking a report setting out his assessment as to the outlook for the insurance industry generally, both international and domestic. 

In response to my request, the Governor responded to me with:

1. A letter setting out an overview of the non-life insurance sector and the Central Bank's 2015 specific supervisory engagement with loss-making firms within it, while abiding by the relevant provisions under statute that prohibit the Central Bank from disclosing confidential information other than in summary or collective form.

2. Section 3.3 of the Central Bank's 2015 Macro-Financial Review which provides a review of insurance in Ireland, the challenges faced by its sub-sectors and the interplay of insurance with financial stability.

3. A note on changes taking place in Ireland that are making the claims environment volatile. 

4. Some suggested areas of domestic policy which could bring greater stability to the operating environment of general insurance in Ireland and reinforce the Central Bank's ability to supervise insurance firms.

A number of issues are widely reported to be contributing to the increasing cost of insurance in Ireland and some of these were raised by the Governor in his letter.  This has in turn coincided with the introduction of Solvency II in January 2016 leading to a necessity for insurance companies to increase their capital reserves.  The Central Bank has stated publically that insurance companies may need to increase their premiums in order to do this.

This is an important issue, but also a complex one involving a number of different parties, including Government Departments, State bodies and private sector entities. My officials are examining the points raised by the Governor and those raised by other interested parties in this area. A process is underway to examine them in detail and to determine what actions may need to be taken.