Paschal Donohoe (Dublin Central, Fine Gael)
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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 direct insurance companies, through legislation or otherwise, as to the pricing level or terms or conditions that they should apply in respect of particular categories of drivers or vehicles.

In making their individual decisions on whether to offer cover and what terms to apply, insurers will also use a combination of rating factors, which include the age and type of the vehicle, as well as the age of the driver, the relevant claims record and driving experience, the number of drivers, how the car is used, etc. My understanding is that insurers do not all use the same combination of rating factors, and as a result prices and availability of cover varies across the market. In addition, insurance companies will price in accordance with their own past claims experience, meaning that in relation to the age of a vehicle and the availability of cover, different insurance companies will use different age thresholds.

In addition, the Deputy should note that the Central Bank as prudential regulator has a responsibility under the current framework, to ensure that firms assess and price risk appropriately. This ensures that firms have the ability to pay all policyholders’ claims in full without recourse to public or consumer funds. In this regard, I would refer the Deputy to Chapter 4 of the Cost of Insurance Working Group’s Report on the Cost of Motor Insurance for more information on the regulatory environment, and in particular the Solvency II Directive, which is the primary legislative framework with regard to the prudential supervision of insurance companies.

Finally, Department officials have been engaging with Insurance Ireland in relation to the availability and cost of insurance for older cars, and have been informed that certain insurance providers have recently changed their acceptance criteria and increased their vehicle age threshold levels. Notwithstanding this, I understand that the Minister of State Michael D’Arcy TD intends to write to Insurance Ireland in order to try and get a more detailed perspective on this matter.