Government have ‘limited powers’ on cost of car insurance. Motorists were advised that the Government had “limited” power to influence the cost of motor insurance premiums as they continue to spiral upwards.
Minister of state for financial services, Eoghan Murphy said while the issue of rising motor insurance costs was one “which requires urgent attention” he had to be “cautious about managing expectations” of consumers anxious to see a drop in premiums.
“It has to be remembered, however, that the ability of the Government to influence insurance pricing is limited as insurance companies are required by European law to price in accordance with risk,” he told the Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach.
“The provision of insurance cover and the price at which it is offered is thus a commercial matter based on an assessment of the risks.
“While we cannot direct insurance companies on the pricing of insurance products we can, with your help, identify measures that may, in the short, medium and longer term, lead to a better operating environment and a reduction in claims costs,” he told the committee.
Mr Murphy said a ‘Cost of Insurance Working Group’ had begun its work examining the issues and would produce “short-, medium- and longer-term” measures to address the issues while taking account of requirements for an “economically vibrant and financially stable insurance sector”.
The minister said that while he wished to “manage public expectations” and could not set prices, the working group could break down the component parts of a premium and use policy levers to try and tackle the costs.
He said there was a lack of transparency around the cost of settling claims or awards in personal injuries cases that do not go through the courts or the Injuries Board, as well as an absence of information from the industry on the number of personal injury claims settled, average injury settlement amount, average fees and average time taken to settle.
Labour’s Seán Sherlock said that he was “worried” by the Government’s attitude on the issue and that what consumers wanted to hear was that it would act to try and compel insurance companies to charge a fair premium.
Mr Sherlock also called for transparency on the part of insurance companies who, he claimed, “if they wanted to, could ignore this process”.
He also said the Central Bank had written to the Department of Finance in August, last year, stating a number of non-life insurance companies had followed an “imprudent pricing and underwriting approach” in recent years and asked why that was allowed to happen.
Sinn Féin’s Pearse Doherty accused the Government of “dragging its feet” on the issue.
“The minister and the Government have tied their hands behind their own backs,” he said.