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 as to the pricing level or terms or conditions that they should apply in respect of particular categories of drivers or vehicles.

With regard to the systems in use in the countries identified by the Deputy, I would refer him to the Cost of Insurance Working Group’s 2017 Report on the Cost of Motor Insurance and in particular Chapter 7.5 and Appendix 7 of that Report which deal with international comparisons.

The Report notes the use in some countries – including New Zealand and parts of Australia and Canada – of what is known as a ‘no fault’ system, where the State pays compensation and/or the cost of rehabilitation and the public pay for this system through taxes. The Report states that some of these models are quite complex and should to be considered in a wider context. As well as impacting on insurance premiums, they may impact on taxation and social security and must be considered in terms of existing constitutional, national and European requirements, e.g. the requirements of EU Motor Insurance Directives in terms of an individual’s right to monetary compensation.

Given the time constraints, the Working Group recommended that a Personal Injuries Commission (PIC) be established with a view to proposing further measures that can help reduce the cost of claims. Amongst other issues, the PIC was charged with analysing and reporting on alternative compensation and resolution models internationally, focusing on common law systems while taking account of social welfare, healthcare and related factors associated with each jurisdictions. The PIC, under the chairmanship of former member of the judiciary Nicholas Kearns is expected to produce its final report shortly.

Notwithstanding the above with regard to particular systems that operate in other jurisdictions, I would be cautious about the introduction of a State backed insurance scheme in this jurisdiction, as such an approach could actually decrease competition in the Irish insurance market, as some insurers may stop insuring particular risks if there is a view that the State is insuring these risks instead, particularly those lines of business that are considered to be unprofitable. This could mean there would be a lack of choice for those seeking cover which could ultimately mean that the cost of insurance could become even more expensive than it is now. Also, on this particular point, there is no reason to believe that the State would be any better at managing this risk than private insurance companies, and as a result there potentially would be a large financial exposure to the State if significant losses were incurred. Any State insurance scheme would be required to comply with the same prudential rules as private companies, thereby meaning that the cost of that insurance would still have to reflect the risk involved. In view of these issues, I am not convinced that a State-backed insurance scheme, whether it be to insure older cars or other risks, would be a panacea with regard to the cost or availability of insurance.

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.