Rose Conway-Walsh (Mayo, Sinn Fein)
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221. To ask the Minister for Finance the reason insurance premiums are not falling at a comparable rate to the reduced cost of claims; the steps he is taking to ensure that savings are passed on to customers; and if he will make a statement on the matter. [21564/23]

Michael McGrath (Cork South Central, Fianna Fail)
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It is widely acknowledged that the cost of claims is the main driver of the cost of insurance. The Personal Injuries Guidelines – adopted in April 2021 – therefore represent a landmark achievement of the Government’s insurance reform agenda, as they have significantly lowered award levels for many common injuries. Recent data from the Personal Injuries Assessment Board (PIAB) indicates that the overall average award has fallen by 38 per cent compared to awards made in 2020 under the Book of Quantum.

Separately, the first National Claims Information Database (NCID) Mid-Year Report on motor insurance indicates that use of the Guidelines led to reductions in the cost of claims settled in the first six months of 2022. According to the report, the average cost of claims settled under the Guidelines, either directly or via the Personal Injuries Assessment Board (PIAB), was between 34 per cent and 47 per cent lower than claims settled under the Book of Quantum in 2020.

These reductions clearly indicate that the Guidelines are beginning to have the desired effect. Their consistent implementation by insurers, the PIAB and the courts should therefore lead to a reduction in the cost of claims, which is the main driver of the cost of insurance. In that regard, I welcome recent data from the Central Statistics Office (CSO) showing that the price of motor insurance in March 2023 was 5.9 per cent lower than in March 2022, and 15.9 per cent lower than April 2021 (when the Guidelines were implemented). This is particularly notable at a time when general annual inflation is 7.7 per cent.

It is important to note that the impact of reforms takes time to transmit to price levels for a variety of reasons. These can include: uncertainty arising from ongoing legal challenges; the inherent complexity of the insurance sector’s operating environment; or even dynamic, external developments which can determine price or supply in a small market such as Ireland.

Moreover, we have yet to see the full impact of the Guidelines on litigated claims. According to the NCID, just 3 per cent of claimants that settled through litigation in H1 2022 settled under the Guidelines. This is significant, as litigated claims make up the vast majority of injury claims costs – in H1 2022, they accounted for 79 per cent of total claims costs, up from 66 per cent in 2020. Nevertheless, I believe these early indicators for claims settled directly and via the PIAB are positive, and that similar trends will continue to be seen as more litigated come to be assessed under the Guidelines.

In summary, reform can take time to implement and in turn see tangible results delivered. The Government has targeted domestic policy action at delivering real and sustainable change benefiting policyholders. In the insurance sector we can see the positive impacts beginning to emerge, particularly regarding motor insurance. Policy-makers now have better tools to measure the results of this work and hold the industry to account. Ensuring this happens is an important part of my job.