Written answers

Tuesday, 28 June 2016

Department of Finance

Insurance Industry

Photo of Michael McGrathMichael McGrath (Cork South Central, Fianna Fail)
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98. To ask the Minister for Finance further to Parliamentary Question No. 107 of 16 June 2016, the number of claims motor insurance companies paid, by amounts paid in respect of personal injuries, vehicle damage, legal fees and so on, by year; and if he will make a statement on the matter. [18440/16]

Photo of Michael NoonanMichael Noonan (Limerick City, Fine Gael)
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The annual Private Motor Insurance Statistics report published by the Central Bank of Ireland is compiled from policy level data submitted by Insurance Ireland to the Central Bank.  The most recent such Report which is for the year 2013 is available on the Central Bank's website at

I am informed by the Central Bank that it does not publish the number of claims that the total amount of motor liability claims pay-outs relate to.  However, it stated that the annual Private Motor Insurance Statistics report does provide a significant amount of information in relation to motor insurance claims development costs.

I am further informed by the Central Bank that in the context of the data submitted to it by Insurance Ireland, it is not possible to obtain a comprehensive assessment of all costs and revenues relating to motor claims. This is because the submission from Insurance Ireland does not supply data on additional claims-related costs, including: estimates on the cost of claims incurred but not yet reported (IBNR) to insurers, changes in estimates of existing claims for prior year accidents and contributions to the claims against uninsured motorists paid to the Motor Insurers' Bureau of Ireland. Other costs not included are distribution, commissions, expenses, reinsurance and taxation.

Aside from the annual Private Motor Insurance Statistics Report a significant amount of additional claims data is available through the Central Bank's Insurance Statistical Review, Insurance Ireland's Annual Fact-file, the Companies Registration Office and commercial organisations who collate and sell claims data to interested parties.

As I have highlighted to the House previously, the lack of data presents difficulties from a policy analysis and development perspective in the area of insurance. The issues being examined in my Department's Review of Policy in the Insurance Sector includes the availability of data and the work of the task force will include examining options such as a national claims register and motor insurance policy data.  This work will take into account what information is currently available and identify any shortfalls.

Photo of Thomas PringleThomas Pringle (Donegal, Independent)
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99. To ask the Minister for Finance the impact the decline in returns on investments through low interest rates has had on the insurance industry and the huge hikes in insurance premium that have been suffered by consumers; his plans to deal with unreasonable hikes; and if he will make a statement on the matter. [18514/16]

Photo of Michael NoonanMichael Noonan (Limerick City, Fine Gael)
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Differing reasons have been put forward by various interested parties to explain Ireland's current increasing insurance costs.  Motor insurance appears to be particularly affected with the cost of premiums increasing significantly in the past twelve months.

Reasons often presented include the increased level of insurance claims and the increasing value of compensation awards.  Others highlight that the highly competitive nature of the domestic market for non-life insurance in recent years has begun to impact on firms' underwriting profitability with underwriting losses reported in 2014 for a number of high-impact firms.

The Central Bank of Ireland has a statutory responsibility to ensure firms assess risks appropriately and offer insurance at a price that adequately takes into account the conditions prevailing in the market such as increasing claims costs. This ensures firms have the ability to pay all policyholders' claims without recourse to public or consumer funds.  It does not have a statutory role in relation to setting premium prices.

In theMacro Finance Review for H1 2016that was published on 14 June, the Central Bank highlighted a number of issues facing the non-life insurance sector, which included the impact of the low interest rate environment that has resulted in a fall in investment income which historically was used to offset underwriting losses. The report stated that the Bank believes investment income will continue to decline as proceeds from maturing assets are reinvested in lower yielding assets. The Report concluded that the domestic non-life insurance sector continues to face a difficult operating environment with all of the high-impact firms reporting underwriting losses in 2015 primarily due to current challenges in the Irish motor market.  As a risk-sensitive regulatory framework, Solvency II, which came into effect on 1 January 2016, should strengthen insurers' resilience.

I am informed by the Central Bank that the decline in returns on investments through low interest rates has been a key theme in its engagement with the insurance industry for a number of years and forms a key part of its supervisory engagement with individual firms. The Opinion on Supervisory Response to a Prolonged Low Interest Rate Environment published by the European Insurance and Occupational Pensions Authority (EIOPA) in February 2013 required all National Competent Authorities to intensify the monitoring and supervision of insurance and reinsurance undertakings with exposure to the risks posed by a low interest rate environment.

To examine the issues affecting the cost of insurance in more detail and to assess what the options are for the Government, I have established a task force in my Department to undertake a Review of Policy in the Insurance Sector.  The first phase of the work of the task force, which began in January 2016, is a review of the Framework for Motor Insurance Compensation.  This is being carried out jointly with the Department of Transport, Tourism and Sport.  This review also deals with broader issues around the Insurance Compensation Fund and its report will be submitted shortly to me and my colleague, the Minister for Transport, Tourism and Sport. 

The broader work of the task force includes an examination of the issues debated during the Dáil Private Member's Motion of the 8th and 9th of June.  The work is being undertaken in consultation with the Central Bank of Ireland, other Government Departments, Agencies and interested bodies.  The aim of the review is to identify the factors contributing to the increasing costs of insurance, and to recommend measures to improve the functioning and regulation of the insurance sector in Ireland, identifying the issues that can be addressed on a more immediate basis and those that need more long-term policy implementation.

This work will be completed over the coming months.

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