Pearse Doherty (Donegal, Sinn Fein)
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79. To ask the Minister for Finance the way in which the Report on the Costs of Motor Insurance will help put an end to the boom-bust model underpinning motor insurance here; and if he will make a statement on the matter. [1738/17]

Michael Noonan (Limerick City, Fine Gael)
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The Working Group on the Cost of Motor Insurance, chaired by Minister of State Eoghan Murphy, completed its Report in December 2016.  The Report was approved by the Government on 10 January 2017 and subsequently published.  The Report sets out a detailed set of 33 recommendations and 71 actions to tackle those factors that are influencing the increasing cost of motor insurance by introducing a comprehensive suite of reforms for the insurance  sector.  While there is no policy or legislative "silver bullet" to immediately reduce the cost of insurance, cooperation and commitment between all parties can deliver fairer premiums for consumers without unnecessary delay. 

Going forward, prudent pricing and reserving practices will be key to avoiding such cycles in the future.  In this respect, the introduction of Solvency II last year should mitigate these risks.  The Deputy will be aware that Solvency II introduces an economic/risk based approach to the measurement of assets and liabilities and a much greater focus on qualitative issues such as governance and the role of the supervisor.  The Central Bank will continue to play a crucial role in ensuring that companies satisfy these requirements.  Directly related to this is that it is important that insurance companies do not become too dependent on investment income and use it to price their insurance products unsustainably. This has been a contributory factor in the past to these cycles.

Furthermore, a key issue identified by the Working Group related to a lack of clarity, certainty and transparency of motor insurance costs.  Greater transparency through the creation of a national claims information database will enable the identification of these trends and should facilitate appropriate policy responses in order to help avoid these cycles in the future.

Finally, with the publication of this report and the successful implementation of its recommendations, fairer premiums can be delivered which will lead to greater stability in the pricing of motor insurance and will help prevent the volatility that we have seen in the market in the past that has led to these cycles.  This will assist in putting to an end the sort of cycles that we have witnessed in recent years.