Written answers

Thursday, 4 July 2024

Department of Finance

Insurance Industry

Photo of Matt CarthyMatt Carthy (Cavan-Monaghan, Sinn Fein)
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82. To ask the Minister for Finance his proposals to reduce insurance costs for motorists and business owners. [28528/24]

Photo of Jack ChambersJack Chambers (Dublin West, Fianna Fail)
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This Government remains strongly committed to achieving a competitive and sustainable insurance market where insurance is affordable and available to all. The implementation of the Action Plan for Insurance Reform is progressing well, with vast bulk of actions now complete, and all ten principal actions finalised.

Insurance reform is a priority for the Government, overseen by the Cabinet Committee Sub-Group on Insurance Reform. The approach involves targeted action across Government departments to enhance the domestic operating environment for insurers. However, under EU legislation (Solvency II Directive), the Government cannot compel insurers in terms of coverage or pricing, as underwriting decisions are based on insurers assessments of risk.

Turning to motor, insurance rates have decreased by around 40 percent since their peak in July 2016, and new capacity is entering the market, benefiting consumers. Despite a 7.4 percent increase in premiums here in the year to May, in comparative terms this is lower relative to an average EU increase of 12.1 percent and a 17.6 percent rise in the UK’s premium levels. This illustrates the effectiveness of Ireland's insurance reform policies as our reforms, in particular targeting personal injury claim costs, have clearly mitigated against the steep rise in insurance costs seen in other markets. The National Claims Insurance Database (NCID) report published earlier this week highlighted an increase in motor damage claims costs. These are largely influenced by a range of external factors including global inflation, and supply chain issues, along with labour market tightness.

The aforementioned Government's Action Plan for Insurance Reform has included significant achievements since 2020, most notably the rebalancing of the Duty of Care in July 2023, reforming the Injuries Resolution Board (formerly PIAB) and introducing the new Personal Injury Guidelines. These will benefit all insurance lines including, personal, commercial and liability cover. In addition, in part due to the more attractive operating environment here, new competitors such as Outsurance and Revolut have entered the motor insurance market, enhancing competition and capacity. In terms of business and commercial insurance, existing providers have indicated to me that they are expanding their risk appetite to underserved areas and I am receiving reports from various sectors of reductions in the rate being charged.

To conclude, it is crucial for the insurance industry to support these reforms by challenging frivolous claims, adhering to new award guidelines, and promoting the Injuries Resolution Board. While the inherently cyclical nature of insurance markets and international pressures have a significant impact, Ireland’s domestic reforms aim to make it a more competitive destination for international insurance capital.

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