The Government should abolish its 2 per cent levy on insurance premiums, and the cut should be passed on to consumers, an Oireachtas committee will recommend this week, writes Carl O'Brien
A report from the Oireachtas Committee on Enterprise and Small Business will say there should be a quid pro quo in the form of reduced premiums from insurance companies which would benefit from the move.
The committee, which has been investigating ways of reducing insurance costs, will say that such a move, along with key reforms in the legal system and insurance industry, would relieve pressure on businesses and consumers.
The conclusion will be an uncomfortable one for the Government, which has been keen to distance itself from blame for high insurance costs. It netted €65 million from the levy last year.
The rising cost of insurance has become a major political issue, with firms warning that thousands of jobs are at risk unless there is a speedy reduction in employers' and public liability premiums, and with consumers voicing frustration at the cost of insuring cars.
Fine Gael last month accused the Government of taking taxpayers' money "under false pretences" by seizing the levy funds while claiming inability to lower insurance premiums.
The committee's report also says plans to reform compensation law and establish a Personal Injuries Assessment Board should be implemented without delay.
In an unprecedented move, the committee chairman, Fianna Fáil TD Mr Donie Cassidy, is to ask members of the judiciary to come before the committee to answer questions on legal reform.
A Government spokesman rejected Opposition claims and said ministers were making good progress in tackling insurance costs.
He said innovations such as alternatives to costly court disputes over compensation, measures to allow for the prosecution of bogus claimants and new road safety measures would bring down insurance costs.
It is also understood that the Tánaiste, Ms Harney, is to meet representatives of major foreign insurance firms in the autumn in a bid to promote increased competition in the domestic market.
Ms Harney has described the insurance industry as "dysfunctional" and the Competition Authority is investigating claims that a cartel is operating in the sector.
The Irish Insurance Federation (IIF), however, insists that foreign insurance firms have not set up here because it is not profitable to do so.
The industry has come in for strong criticism in recent days for failing to lower motor premiums after revealing profits of € 183 million for last year.
The profits wipe out almost all the industry's losses in the previous three years.
Mr Cassidy said yesterday he would call on the IIF to appear before the committee to explain the reasons for the level of motor insurance premiums.
"It is an extraordinary level of profitability and it is particularly galling for many businesses which have been struggling to meet huge rises in premiums.
"Insurance is now the number one cost for many businesses, with some being forced to close because of premiums costs and it is becoming a serious competitive issue for the national economy," he said.
The Oireachtas committee's report, due to be published on Thursday, will conclude that a series of additional road safety reforms be undertaken as part of its recommendations for bringing down insurance costs. It will call for a requirement that learner drivers attend driving courses before sitting their test.
It will also support plans announced by the Minister for Transport, Mr Brennan, to seize the vehicles of uninsured drivers.