Written answers

Monday, 11 September 2017

Department of Finance

Motor Insurance Costs

Photo of Niamh SmythNiamh Smyth (Cavan-Monaghan, Fianna Fail)
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142. To ask the Minister for Finance if his attention has been drawn to the fact that persons here are getting insurance quotes three times cheaper in Northern Ireland; his plans regarding the rising cost of motor insurance; when persons will see this intervention in their pockets; and if he will make a statement on the matter. [37738/17]

Photo of Paschal DonohoePaschal Donohoe (Dublin Central, Fine Gael)
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Differing costs of insurance between different markets and jurisdictions is an issue that exists across the EU. This arises for a range of reasons such as for instance differences in the size and volume of insurance awards.  While I cannot comment on the particular circumstances of the quotations that the Deputy references, and if such differences are typical, I would note that Northern Ireland’s motor insurance market is a distinct and separate one, and as a result differences in pricing will inevitably arise.

The European Commission’s Green Paper on Retail Financial Services considered this issue and the provision of insurance and other retail financial services on a cross-border basis.  With regard to the provision of insurance, it noted that “there is evidence of market fragmentation in the differing prices for identical or similar products available in different domestic markets, even from the same provider.”  It also acknowledged that: “differences in prices can be attributed to factors such as varying conditions in domestic economies, uneven levels of purchasing power, financial or institutional structures (e.g. taxation, regulation or supervision), or differing funding costs, value propositions (sometimes related to product tying or packaging) and pricing structures in local markets.  For insurance (specifically motor insurance) variations in the costs and risks of providing cover can vary substantially between the different Member States, which can justify some price differences.”  It is primarily for these reasons therefore that differences may exist between two separate markets.

With regard to addressing the cost of insurance, my predecessor as Minister for Finance, Deputy Michael Noonan, established the Cost of Insurance Working Group in 2016 in order to examine the factors contributing to the increasing cost of insurance and identify what short, medium and long-term measures can be introduced to help reduce the cost of insurance for consumers and businesses.  The initial focus of the Working Group was the problem of rising motor insurance premiums and as a result, a broad range of issues affecting the cost of motor insurance were examined.

The Working Group’s 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.  The second quarterly update was published on the Department's website on 21 July 2017 and shows 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. All 17 of these action points have been completed by their deadline.  A further report for the third quarter will issue in the coming weeks.

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.

Finally, it should be noted that the most recent CSO data (for August) indicates that motor insurance premiums have reduced by 14% year-on-year.  While CSO statistics indicate a greater degree of stability on an overall basis, these figures only represent a broad average and therefore there are some people who may still be seeing increases for various reasons.  I am hopeful that greater stability in pricing will continue to occur, and that premiums will continue to fall from the very high level of last year.

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