Niamh Smyth (Cavan-Monaghan, Fianna Fail)
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123. To ask the Minister for Finance his views on correspondence (details supplied); the steps he is taking to address rising motor insurance costs; and if he will make a statement on the matter. [33180/17]

Niamh Smyth (Cavan-Monaghan, Fianna Fail)
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124. To ask the Minister for Finance if he will respond to matters raised in correspondence (details supplied); and if he will make a statement on the matter. [33181/17]

Paschal Donohoe (Dublin Central, Fine Gael)
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I propose to take Questions Nos. 123 and 124 together.

As Minister for Finance, I am responsible for the development of the legal framework governing financial regulation.  Neither I nor the Central Bank of Ireland can interfere in the provision or pricing of insurance products, as these matters are of a commercial nature, and are determined by insurance companies based on an assessment of the risks they are willing to accept.  This position is reinforced by the EU framework for insurance which expressly prohibits Member States from adopting rules which require insurance companies to obtain prior approval of the pricing or terms and conditions of insurance products.  Consequently, I am not in a position to review individual cases nor to direct insurance companies as to the pricing level or terms or conditions that they should apply in particular cases. 

However, I do accept that it is possible for the State to play a role in helping to stabilise the market and deal with factors contributing to the cost of insurance.  For this reason, my predecessor as Minister for Finance, Michael Noonan T.D. established the Cost of Insurance Working Group in 2016 in consultation with the Central Bank and other Departments and Agencies.

The initial focus of the Working Group was the issue of rising motor insurance costs and its Report on the Cost of Motor Insurance was published in January 2017.  The Report makes 33 recommendations with 71 associated actions to be carried out in agreed timeframes, which are clearly set out in an Action Plan.  45 of these action points are due to be implemented by the end of this year with the remainder scheduled for completion before the conclusion of 2018.

There is a commitment within the Report that the Working Group will prepare quarterly updates on its progress and the first such update was published in early May. 

My Department will publish the second quarterly update shortly.  This update will again show the progress to date on the overall implementation of the recommendations, with a particular focus on the 17 action points which were due for completion in the second quarter of 2017.

I believe that the implementation of the Report on the Cost of Motor Insurance will make a difference to the pricing of insurance premiums over the next 18 months. I also believe that the Setanta judgment, by finding that MIBI is not liable to meet third party claims, removes a major uncertainty from industry, which I would expect to be reflected in pricing in the short to medium term.

In relation to the Deputy’s query about ability of insurers from other EU countries to compete in the Irish market, it should be noted that the EU framework allows for the freedom to provide services from one Member State into another throughout the Union. This is a key principle of the European Union and is availed of by a number of insurance firms established in Ireland in order to conduct business into other EU Member States, and by companies which are authorised elsewhere conducting business into the Irish market. This can be done either through:

- establishing a branch operation in the host country and thus conducting business on a 'freedom of establishment' (FOE) basis; or

- writing business from the home country (i.e. where authorised) into  the host country on a 'freedom of services' (FOS) basis.