Written answers

Thursday, 30 June 2016

Department of Jobs, Enterprise and Innovation

Insurance Costs

Photo of Róisín ShortallRóisín Shortall (Dublin North West, Social Democrats)
Link to this: Individually | In context | Oireachtas source

264. To ask the Minister for Jobs, Enterprise and Innovation the action she is taking to address the escalation in the cost base of small and medium-sized enterprises associated with soaring insurance costs; and if she will make a statement on the matter. [18918/16]

Photo of Mary Mitchell O'ConnorMary Mitchell O'Connor (Dún Laoghaire, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Improving Ireland’s competitiveness position is a key economic priority for Government. As set out in 'A Programme for a Partnership Government', our objective is to protect our national competitiveness from unsustainable cost growth and to deliver a job-fit business environment which ranks in the top tier globally.

The Costs of Doing Business Report published by the National Competitiveness Council on April 21st provides an assessment of Ireland's cost competitiveness performance vis-a-vis a range of competitor countries. The report, which has been noted by Government, concentrates on the costs that are largely domestically determined such as labour, property, transport, energy, water, waste, communications, credit /financial, and business service. It finds that Ireland’s cost base has improved across a range of metrics over the last five years. This has made Irish firms more competitive internationally and made Ireland a more attractive location for firms to base their operations in. However, despite these improvements, Ireland remains a relatively high cost location for a range of key business inputs and there is upward cost pressure evident in the market for commercial insurance. The report is a timely reminder of the risks of complacency regarding our cost competitiveness. To protect the gains achieved to date, to sustain the recovery, and to ultimately spread the benefits of economic growth to all, we must continue to enhance all aspects of our cost competitiveness. The policy implications of the Costs of Doing Business report and the associated reforms required to address Ireland’s cost base, will be included in the Council’s annual Competitiveness Challenge report which will be brought to Government and published later this year.

Insurance costs are relevant to businesses of all sizes and in all sectors of the economy. In general insurance costs account for a relatively low proportion of the overall enterprise cost base. While insurance costs represent a minor component of enterprise operating costs, premium increases can have an impact on costs, particularly for SMEs and micro enterprises. Under EU law, the ability of the Government to influence insurance pricing is limited. While the provision and the pricing of insurance policies is a commercial matter for insurance companies, competitive and transparent markets are vital.

While my Department has no role in the supervision or regulation of insurance, which is a policy and supervisory matter for the Department of Finance and the Central Bank respectively, last year, the National Competitiveness Council (NCC) considered the commercial insurance market in Ireland as part of its 2015 Costs of Doing Business in Ireland 2015 report. It subsequently set out a range of potential actions which could help facilitate enhanced cost competitiveness in the non-life commercial insurance market. These were set out in its Competitiveness Challenge 2015 report. The Council concluded that the absence of price data makes it very difficult to assess market conditions and competitiveness in the non-life insurance market. The Council subsequently recommended that responsibility for improving insurance cost competitiveness of commercial insurance must be clearly assigned and accorded sufficient priority by policymakers and there is a need to comprehensively benchmark insurance costs and the drivers of costs in Ireland with costs in our key competitors.

The Department of Finance is currently examining the factors which contribute to increasing costs of insurance. This work is part of an overall review of policy in the insurance sector which that Department is carrying out in consultation with the Central Bank and other Departments, Agencies and external stakeholders. My Department will continue to engage with the Department of Finance in their ongoing work.

Comments

No comments

Log in or join to post a public comment.