Dáil Debates Official Report - 27/March/2001 Motor Insurance. 67. Mr. Bell asked the Tánaiste and Minister for Enterprise, Trade and Employment if her attention has been drawn to the exorbitant car insurance prices being charged to young drivers in the Louth-Meath area; if she has any plans to carry out an investigation into this unfair practice; if she has any powers available to her to restrict or reduce or cap car insurance premiums to young car drivers; and if she will make a statement on the matter. [8740/01] Minister of State at the Department of Enterprise, Trade and Employment (Mr. Treacy): Motor insurance premia are normally based on underwriting experience including trends in the level, frequency and cost of claims, for particular risks and classes of risk and are a matter of judgment by individual private insurance companies. I am aware of car insurance prices varying across different  regions of the country. However, EU law prevents us, from intervening directly with the insurance companies, in the matter of premium levels, or in respect of the risks, that they are prepared to underwrite. Nevertheless, following publicity in recent years regarding differences in motor  insurance in different areas of the country, our officials contacted a number of insurance companies to establish the reasons behind such pricing policies. The insurance companies stated that the differentials were attributable to rising motor claims? costs and formed part of an overall review of pricing policy, in respect of selected segments of the private motor insurance business.  It was also confirmed that the increases in some areas were due to an increase in commuter numbers in those areas, with consequential increases in claims frequency. The primary focus of initiatives aimed at reducing the cost of insurance for motorists, including young drivers, should be on reducing the frequency of accidents and the delivery costs of subsequent claims. There are a number of such initiatives in place including, as a result of a recent Government decision, the establishment of a Personal Injuries Assessment Board. It is hoped that the work of the PIAB would, in the course of time, substantially reduce the number of personal injury claims being brought to court, thus reducing the legal and other costs involved in the delivery of personal injury compensation. It is expected that the board will be operational early in 2002. Furthermore, the work of the Motor Insurance Advisory Board, which I re-established in 1998, is aimed at providing us, with the necessary information  and advice, on trends in motor insurance costs and with policy recommendations for addressing those costs. The issue of the high cost of insurance for young drivers is especially being examined by the board. The recent release of the board's Interim report, under the Freedom of Information Act, has provoked an interesting debate. However, it is important to note that shortly after that report had been prepared, it became apparent that the data on which it was based was questionable. The MIAB is currently proceeding with an analysis of more accurate data; and it's final report is expected by the end of this year. Upon receipt of this report and taking all other initiatives into consideration, I will then decide as to what further action is appropriate to reduce the cost of motor insurance, in this country. An Ceann Comhairle: We will now take leaders' questions. Mr. Noonan: We all do constituency work and, a fortnight ago, a 25 year old person came to me who had paid £2,300 for insurance last year. This year the premium rose to £2,700 even though there had not been any accidents. Will the Taoiseach join me in condemning what appears to be a rip-off of under 25 year olds, women and old age pensioners, by the insurance industry? The Motor Insurance Advisory Board has found: that drivers between the ages of 18 and 25 are now, contrary to conventional wisdom, the most profitable motor insurance risk; that women drivers are paying far more than they should be; and that old age pensioners, who are considered as a high risk category by the insurance industry, are actually one of the profitable categories. Will the Taoiseach condemn these practices? Will he ensure that the Tánaiste brings forward the full report without delay? Will both the Taoiseach and the Tánaiste have immediate consultations with representatives of the insurance industry to bring car insurance rates down to what they should be, so that the industry would get moderate profits and the rip-off that has been going on for years will stop? Mr. Quinn: While I know this matter will be raised later on the Adjournment by Deputy Rabbitte, is the Taoiseach aware that the Minister in question has been in possession of this report since last July? At a recent meeting of the relevant Oireachtas committee, representatives of the industry were still maintaining that the provision of insurance cover for this category of young driver was a loss-making exercise from the point of view of the industry, and that that was one of the reasons premia rates were so high. Mr. Higgins (Dublin West): They make fools of the committee, and the Tánaiste is sitting on information. It is unbelievable. The Taoiseach: I know this matter is due for discussion on the Adjournment later, but the Government shares the concerns about the cost of insurance for young drivers. Over the years it has been excessively high, and remains so. The Minister of State, Deputy Treacy, who is responsible----- Mr. Creed: He is irresponsible. The Taoiseach: -----for this area, has been working with representatives of the industry. Firm figures from the industry about its profits and losses in these areas are in the public domain. The Motor Insurance Advisory Board, which the Government established, and the Personal Injuries Advisory Board are there to try to bring down insurance costs. I note what Deputy Noonan said about the Government's efforts - including efforts made by myself, the Tánaiste, and the Minister of State, Deputy Treacy - to try to obtain more action in this area. However, given recent figures in the category referred to, it would appear that the insurance industry is not making any profit, and has not done so for some years. That is what lies behind the contention it has made. Mr. Rabbitte: The Taoiseach has had a report since last July which shows the opposite. Mr. Noonan: Is the Taoiseach aware that since last July there has been a report in the Tánaiste's Department of Enterprise, Trade and Employment, which confirms that insuring under 18 year olds is a loss making activity, but that insuring people between 18 and 25 - contrary to the conventional wisdom, and contrary to the briefing we have been given in this House - is actually a profitable activity? To put it bluntly, rather than feeling the pain of the 25 year olds, will the Taoiseach tell us what he is going to do about it? Mr. J. Mitchell: What has he done? Mr. Noonan: What has he done about it since last July? This is one of the major concerns for young people. We have been telling them consistently that because of their high level of accidents and high outgoings, the premiums cannot come down, yet now we discover that this is simply not true. The Taoiseach: Those figures are in dispute. The Minister will outline the reasons behind that on the Adjournment later this evening, but over the past six to nine months the figures have not been agreed to by the industry. The Government established the Personal Injuries Advisory Board. One may well ask why it was not set up years ago, but it has been established to deal with the issue of personal injuries, whence this dilemma has arisen. We established the board to tackle that matter. Because of the arguments and facts that have been put forward regarding such cases, for a long time, personal injury claims involving young people have been enormous, and insurance policies have not been profit-making ventures. That is why we have set about trying to deal with the issue of personal injury cases within the advisory board. Back to Dáil Questions index