For Oral Answer on : 01/02/2024
Question Number(s): 100 Question Reference(s): 4591/24
Asked by: David Stanton T.D.
To ask the Minister for Finance to outline the efforts being made by his Department to engage with insurance providers on the cost of motor insurance premiums; the insights provided by the National Claims Information Database Report on Private Motor Insurance published in December 2023; and if he will make a statement on the matter.
At the outset, it is important to note that neither I, as Minister for Finance, nor the Central Bank of Ireland, can direct the pricing or provision of insurance products. This position is reinforced by the EU framework for insurance (the Solvency II Directive).
Notwithstanding this, the Government has implemented a comprehensive strategy to reform our insurance sector. With respect to motor insurance, key achievements include the Personal Injuries Guidelines; the Central Bank’s ban on price walking; and strengthening the Injuries Resolution Board (formerly the Personal Injuries Assessment Board; PIAB).
The National Claims Information Database (NCID) is a key evidence-base to assist policymakers to monitor the impact of the reforms. The latest Private Motor Report, published last December, found that the average premium declined by 19 per cent from its peak in 2018, to €568 in 2022, including a further 7 per cent year-on-year reduction from 2021. These findings are welcome, particularly in light of the current inflationary environment, and indicate that consumers have benefitted from lower premiums overall in recent years.
Indeed, during the latest series of bilateral meetings held by Minister of State Carroll MacNeill in late 2023, insurers indicated that it is due to Government reforms that Ireland has not seen dramatic price rises like those being experienced in other jurisdictions. For example, while the latest CSO CPI data shows a 2.7 per cent increase in motor insurance prices here in the year to December 2023, prices in the UK, a market where many of our motor insurers also operate, rose by over 43 per cent during the same period.
I am aware that motor insurance prices may now be rising for some customers here, given current inflationary pressures, which have particularly impacted the cost of damage claims, for example, with increased costs for spare parts and labour. Indeed, the latest NCID Motor Report found that damage claims accounted for 46 per cent of total claims cost in 2022, compared to 30 per cent in 2021.
However, the NCID also highlights the potential for Government reforms to lower the overall cost of claims, which drives premiums. For example, the average cost of claims settled under the Personal Injuries Guidelines in 2022 (either directly or through the Injuries Resolution Board) was between 32 to 47 per cent lower, compared to 2020. In addition, the data shows that the recently enhanced Injuries Resolution Board continues to offer a faster route for settling claims than litigation, as well as substantially lower legal fees.
Therefore, it is my belief that the Government’s reform package has targeted the key underlying factors that influence premiums, and that through complete and consistent implementation of these reforms, we can continue to achieve further improvements in the cost of insurance for motorists, as well as other groups.