Insurance Cost Crisis

I asked the Minister for Finance his plans to deal with the escalating costs of insurance premiums; and if he will make a statement on the matter.

My predecessor as Minister for Finance, Michael Noonan T.D. established the Cost of Insurance Working Group in 2016 in order to examine the factors contributing to the
increasing cost of insurance and identify what short, medium and long-term measures
can be introduced to help reduce the cost of insurance for consumers and
businesses. The initial focus of the Working Group was the problem of rising motor
insurance premiums and a broad range of issues affecting the cost of motor insurance
were examined.

The Working Group’s Report on the Cost of Motor Insurance was published in January
2017. The Report makes 33 recommendations with 71 associated actions to be carried out in agreed timeframes, which are clearly set out in an Action Plan. 45 of these action
points are due to be implemented by the end of this year with the remainder scheduled
for completion before the conclusion of 2018.

There is a commitment within the Report that the Working Group will prepare quarterly
updates on its progress and the first such update was published in early May. The
second quarterly update was published on the Department’s website on 21 July 2017
and shows the progress to date on the overall implementation of the recommendations,
with a particular focus on the 17 action points which were due for completion in the
second quarter of 2017. All 17 of these action points have been completed by their
deadline.

It should be noted that the most recent CSO data (for June) indicates that motor
insurance premiums have reduced by 10.2% year-on-year. I do, however, accept that
while CSO statistics indicate a greater degree of stability on an overall basis, these
figures only represent a broad average and that there are many people who are still
seeing increases. I take the view that while the greater stability in pricing is a good
thing, premiums are still at a very high level.

However, I believe that the implementation of the Report on the Cost of Motor Insurance
will make a difference to the pricing of insurance premiums over the next 18 months. I
also believe that the Setanta judgment, by finding that MIBI is not liable to meet third
party claims, removes a major uncertainty from industry, which I would expect to be
reflected in pricing in the short to medium term.

Additionally, in January, the Cost of Insurance Working Group embarked on its second
phase to examine issues around the cost of insurance for businesses, specifically
Employer Liability (EL) Insurance and Public Liability (PL) Insurance. It is envisaged
that the final results of this second phase will take the form of an addendum to the
existing Report. As with the first phase, the aim is for all relevant bodies and
stakeholders to work together in order to deliver fairer premiums for businesses without
unnecessary delay. It is hoped that a final report will be published in the autumn.
The Working Group is building upon the previous work done in the motor phase in order
to determine how it can be applied in the employer liability and public liability insurance
claims areas particularly in relation to:

  •  Personal Injury data and information
  •  Effects of legal costs and litigation processes on insurance costs
  •  Current claims compensation arrangements and cost of claims
  •  Impact of unlawful activity on insurance sector

The Working Group is also considering the impact of the cost of insurance on the
competitiveness of particular business sectors, the impact of health and safety issues
on the cost of insurance and other market issues.

The Working Group has met nine times this year and has held extensive consultations
with a range of stakeholders including the Hotels Federation of Ireland, IBEC, ISME, the
Vintners’ Federation of Ireland (VFI), the Licensed Vintners’ Association (LVA), the
Retail Grocery Dairy & Allied Trades Association (RGDATA), Chambers Ireland, the
Law Society of Ireland and the Health and Safety Authority.

 

Further consultations are also planned and I would invite further submissions from interested parties to insurance@finance.gov.ie

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