Noonan orders review of insurance sector, particularly motor costs

Minister for Finance Michael Noonan has begun a review of the insurance sector, with a particular emphasis on motor insurance.

Mr Noonan said officials in the Department of Finance would look at the reasons for the increase in insurance premiums and part of the review would include engagement with public and private bodies.

The review will be completed “within months”, the Minister added.

He declined however to re-establish the Motor Insurance Advisory Board, which Fianna Fáil finance spokesman Michael McGrath said had been successful in reducing motor insurance premiums.

Mr McGrath said there had been a “rapid escalation in premiums” and he called for the board to be re-constituted to also allow it to examine the profitability of the industry, the settlement of claims and the impact of false and exaggerated claims on premiums.

Mr McGrath said premiums had risen by up to 30 per cent last year and the industry was predicting 2016 increases of 25 per cent.

That meant, he said, that a customer paying a premium of €400 in 2014 would be paying between €650 and €700 after this year and that was not sustainable.

The Fianna Fáil spokesman said those most affected were young drivers and motorist with older cars and there was no transparency in out of court settlements and no consistency in court awards.

During finance questions in the Dáil, Mr Noonan said that under EU law insurance companies were obliged to price policies on the basis of risk and "neither the Central Bank nor the Minister can intervene to direct pricing policy", but it did not preclude the Government from taking action.

He pointed out that recent reversals investments markets had had an impact on insurances companies who were involved in “restoring core underwriting profitability”.

Mr Noonan said initial checks by his officials had shown the frequency of claims had increased in recent years and the number of large claims had also risen.

The “claims environment is volatile” and this had been affected by changes in courts’ jurisdiction in 2014. He added that customers were also more likely to employ a solicitor which had also increased costs and the introduction of periodic payments would also have an impact.

Mr Noonan added that “certainly there are issues that needed to be addressed” and the review would be completed within months.