|
Dáil
Debates Official Report - May 2000
92.
Mr. Rabbitte asked the Tánaiste and Minister for Enterprise, Trade
and Employment the steps, if any, she will take to ensure that car insurance
is affordable for young drivers; and if she will make a statement on the
matter.
Mr. Treacy: Current high levels of premiums for young drivers are
directly related to adverse claims experience of young drivers as a risk
category. Accordingly, the primary focus of initiatives aimed at reducing
the cost of motor insurance for young drivers must be on reducing the
frequency of accidents and the associated cost of claims. The key to this
is to create appropriate conditions for improving their standards of driving
and their appreciation of road safety.
A number of initiatives are in place and are being taken to improve driving
standards and safety awareness amongst all drivers, including young drivers.
In my own area these include: the establishment in 1998 of the Motor Insurance
Advisory Board; the abolition of the cap on brokers commissions in 1999,
which should introduce further competition into the market and the establishment
of a special working group to advise on the establishment of a personal
injuries tribunal and to examine issues surrounding alternative systems
of personal injury compensation in operation in other jurisdictions. The
group will present its final report shortly. In the light of its report,
I will consider what follow up to the work of this group is necessary.
Mr. Rabbitte: Does the Minister accept - I mean no disrespect to
him - that is the answer trotted out for many years on this issue? Does
he accept it is of no value to young male drivers, in particular, who
cannot get access to insurance? If an insurer takes them on, it is at
exorbitant rates. I am sure the Minister is familiar with the recent IBA
survey which suggested that the quotes, in so far as one can get them,
are in danger of going through the £4,000 per annum barrier for young
male drivers.
Mr. Treacy: I am fully aware of the situation. I have given much
time and attention to it, and am still doing so. I established the Motor
Advisory Board in 1998 and appointed to the board 17 people who are actively
involved in the motor and insurance industries and the business sector.
They are working assiduously to see what can be done to ensure we can
create a structure in which young drivers can get a reasonable premium.
Mr. Stanton: When will we see action?
Mr. Treacy: We are doing our best. Many people have tried to do
this before me and they did not have any success. Be assured, our Department
will do what it can to ensure we can assist. I would like to resolve this
issue but the facts and the statistics make it virtually impossible and
it is against that background we must operate. Our priority must be to
make sure cover is available and to ensure there are viable and liquidity
strong insurance companies to give the cover. It is against that background
and looking at all the surveys, analysis and statistical data that we
are doing what we can as quickly as we can to ensure we change the situation.
However, there will have to be a huge change in the attitude of responsible
people who have come through the system and young people who want cover.
There will have to be many changes across the board. Our Department and
the Department of the Environment and Local Government, in particular,
in co-operation with the Garda Síochána and others are doing what they
can to make major changes. Slowly, but surely, we are making some progress.
Mr. Rabbitte: The Minister said one of his duties is to make cover
available but, plainly, cover is not available. Again, I instance the
IBA survey. It took a fictional 22 year old professional male with a 1999
Volkswagen car in Kildare and sought quotes. Only Quinn Direct gave a
quote of £3,712. Cover is not available. Surely, this is a temptation
to young drivers to go on the road without insurance?
Mr. Treacy: There are no figures to suggest there are more uninsured
drivers on the road now than previously. As the Minister of State charged
with responsibility for this area, I have not received many representations
in recent years from people who have been refused cover. Cover is being
made available but at a very high cost. My priority is to ensure that
cost is reduced in so far as it can be. I have tried everything possible
to do that in consultation with the insurance industry and the motor industry
and those consultations are ongoing. The motor insurance advisory board
is trying to ascertain if we can come up with a new formula or a new structure.
Such a new structure would involve a major change and, if we make the
progress we hope, it might not be so palatable to people. We hope such
a new structure would be accepted - although that would not be easy -
which would allow young people to get cover but there would be certain
limitations.
Mr. Rabbitte: I am disappointed the Minister of State does not
seem to understand the urgency of the fact that young people are not able
to get insurance cover. My colleague, Deputy Upton, tabled this question
on foot of representations she received and I am sure every Member has
received similar representations. Is it not the case that many young males,
in particular, cannot get cover and that to offer them cover at a premium
in the order of £4,000 is tantamount to offering them no cover? Is it
not time to consider what possible interventions the State might make
to deal with this problem? Some of these young people need their cars
to go to work, they need them for their livelihoods.
Mr. Treacy: I am surprised that a man of Deputy Rabbitte's experience
would call for the intervention of the State on this issue. We are debarred
by European Union rules from interfering in this area. We cannot interfere
with the market, the insurance industry or direct that cover be given.
All we can do is try to create an environment and a legislative framework
within which people can compete for cover and ensure that the industry
responds to that. Based on the information and statistical data available,
it is clear that no insurance company here is making a profit on motor
insurance cover. They all have underwriting losses.
When the Deputy was in the Department in 1997 he requested the professional
staff to carry out an evaluation and they concluded there were underwriting
losses and that no excessive profits were being made by the insurance
companies here that provide motor cover. The motor insurance advisory
board, which is made up of eminent people, some of whom have major skills
in this area, is analysing this matter in great detail and I await its
report.
Mr. Rabbitte: Investment income was not taken into account in that
analysis.
Mr. Treacy: It has a variance of 2% to 5% in the overall insurance
area. I am waiting for the figures to come through. Every effort is being
made to address this issue and I fully understand the problems in this
area.
135. Ms
O'Sullivan asked the Tánaiste and Minister for Enterprise, Trade
and Employment if her attention has been drawn to the serious difficulties
being created for young motorists arising from the excessive cost of
motor insurance and the fact that some young male motorists are unable
to secure quotes; the proposals, if any, she has to ensure the availability
of affordable insurance for young drivers; and if she will make a statement
on the matter. [8022/00]
Minister of State at the Department of Enterprise, Trade and Employment
(Mr. Treacy): I am aware that motor insurance is often available
only at a high price to young people, especially young male drivers.
However, this is directly related to the adverse claims experience of
young, especially male, drivers as a risk category. The 1996 Deloitte
and Touche report on an economic evaluation of insurance costs found
that the average cost of an insurance claim for 17 to 24 year old drivers
is twice that for the 36 to 40 age group and that motorists in the 17
to 24 age group are responsible for over three and a half times the
total average claims costs incurred for motorists in the 36 to 40 age
group.
My re-establishment of the Motor Insurance Advisory Board was a major
initiative aimed at providing us with information and advice on trends
in motor insurance costs and with policy recommendations for addressing
those costs. The board,
whose expanded membership includes a member representing young drivers'
interests, has undertaken an ambitious programme of work and research,
particularly in relation to the basis of charges to young drivers.
EU law prevents me from intervening directly with the insurance companies
in the matter of premium levels or in respect of what risks they are
prepared to underwrite.
Therefore, the primary focus of initiatives aimed at reducing the cost
of motor insurance for young drivers must be on reducing the frequency
of accidents and the associated cost of claims. The key to this is to
create appropriate conditions
for improving their standards of driving and their appreciation of road
safety.
A number of initiatives are in place and are being taken to improve
driving standards and safety awareness amongst all drivers, including
young drivers. The Irish Insurance Federation, in conjunction with the
driving instructors register, has introduced a scheme of insurance premium
discounts for the young driver on completion of a required number of
driving lessons. The National Safety Council, in co-operation with the
Gardaí, continue to promote anti-speeding and anti-drink driving media
campaigns, including road safety educational programmes for secondary
school students. My colleague, the Minister for Environment and Local
Government, Deputy Dempsey, has been asked to look at a graduated licensing
system for learner drivers, based on the Ontario model which could have
a significant impact if introduced here in Ireland.
For those motorists who are having difficulty getting a quote for motor
insurance and in recognition of the compulsory nature of third party
motor insurance the declined cases agreement between the Minister for
Enterprise, Trade and Employment and the Irish Insurance Federation
offers the motorist the opportunity of a motor quotation subject to
certain criteria.
Back
to Dáil Questions index
|
