Dáil Éireann - Volume 402 - 13 November, 1990
Adjournment Debate. - Motor Insurance Charges.
An Leas-Cheann Comhairle Jim Tunney
An Leas-Cheann Comhairle: Deputy Deenihan has been given permission to raise on the Adjournment the question of the difficulty of young drivers and the matter of spiralling insurance charges. Deputy Deenihan has five minutes and the Minister will have five minutes.
 Rather than interrupt the Deputy I will ring the bell when the Deputy's five minutes are up.
Mr. Deenihan Mr. Deenihan
Mr. Deenihan: Motorists, in particular young motorists, are facing unacceptably high motor insurance premiums in this country. On average the cost of motor insurance is three times greater than in Northern Ireland and the United Kingdom.
Young motorists are particularly affected by the high cost of insurance premiums with some companies reluctant to even quote them. The high cost of insurance is borne out by the following examples which I discovered today. One young motorist in Portlaoise was quoted £1,746, whereas an 18 year old from County Wicklow was quoted £1,226. Indeed I heard on the radio today of a case where a young motorist was quoted £1,500, which was a rise of £700 on his previous premium. Insurance companies will tell us that the increases have been in the region of 20 per cent to 30 per cent. However, this shows conclusively that the rise is more like 70 per cent to 90 per cent and it is totally unacceptable. It deprives a large number of young people of the right to drive and in some cases deprives them of employment opportunities.
It is clear that continued increases will further push motor insurance out of the reach of greater numbers of young people. To seek to reduce the cost of motor insurance here we must first identify the reasons for the high cost and examine the means to reduce these costs.
It is clear that the high cost of insurance is directly as a result of the losses made by insurance companies. Underwriting losses on motor insurance have increased from £18 million in 1986 to £90 million to a £100 million in 1989 and will increase further this year.
It is estimated by the Garda that uninsured drivers make up 8 per cent to 10 per cent of the total number of drivers at an estimated cost to the industry of £30 million per year. This adds approximately £30 to the cost of insurance for each  motorist. The Garda estimate that somewhere in the region of 80,000 to 100,000 cars are driven around each day without insurance. There is a low conviction rate in this area.
The accident rate in Ireland is the highest in Europe at present. About 8,500 people were injured in motor accidents in 1989. The number of injuries arising from road accidents in 1989 increased by 5 per cent over 1988. The numbers which are not available for this year are likely to be greater, I understand. Action must be taken to tackle this problem.
The means by which we test the quality of our drivers is the driving test. I have in the past expressed concern over the unacceptable length of waiting lists for tests. I welcome the increase in the number of testers by the Department but I dispute the claim that this will clear the backlog within one year. It is estimated that, prior to the increase in the number of testers, it would take up to eight years to clear the existing backlog without any new applications.
The average third party injury claim in Ireland is six times higher than the equivalent figure in the United Kingdom. Despite the Courts Bill and the subsequent abolition of the jury system, awards have increased instead of decreasing. The number of claims has also increased by over 5 per cent in the past year.
Another factor is the number of provisional licence holders. There are about 230,000 people on provisional licences in this country at present. There is no control in this country on the granting of provisional licences.
I recognise that the cost of the insurance premiums for young people is higher than that for other drivers because of the higher number of claims in this sector. The Irish Insurance Federation claim that the relative claim cost for policy holders in 1988 under 25 years was 79 per cent above average.
We must do something about this scenario. I have a number of proposals which I will briefly outline. We should introduce a personal insurance disc which  would make detection of uninsured drivers easier. For provisional licence holders we should have a module in our schools on road safety and rules. Little reference is made in schools to road safety and rules, and most youngsters do not know the rules of the road. There should be a written or oral test prior to the granting of provisional licences. There should also be a compulsory course which would provide credits towards the final test. A similar system operates in parts of the United States very successfully.
An Leas-Cheann Comhairle Jim Tunney
An Leas-Cheann Comhairle: You heard the bell?
Mr. Deenihan Mr. Deenihan
Mr. Deenihan: Yes. There should also be incentives for taking driving lessons. In relation to drinking and driving, greater emphasis should be placed on spotchecks. There should also be greater emphasis on spotchecks for motor insurance. We should have a special traffic corps to deal with motor offences only.
Minister for Industry and Commerce (Mr. O'Malley) Desmond J. O'Malley
Minister for Industry and Commerce (Mr. O'Malley): In the course of his speech Deputy Deenihan identified what we are all aware of as a problem. In fairness the Deputy identified many of the causes. I would lay more emphasis on some causes than others because they contribute more than others. The root cause is a figure the Deputy quoted, from which it appears, incredibly, that the average cost of the personal accident claim in this country is six times higher than that in other jurisdictions. We must ask ourselves why. Why have we a court system that allows that all the time and, one might almost say, encourages it? Why can there be such an enormous divergence between what happens let us say on this side of the Border and on the other side? One sees the differences reflected in the premiums. The premiums in this part of the island are often three and four times higher than they are in the other part in what many people would regard as a perhaps more dangerous place. The simple reason is that, if we  perpetuate the claims system we have, we will perpetuate higher premiums. It is very regrettable. That cannot be said often enough, and I have tried to say it a number of times over the past several years, but one immediately runs into difficulty with the vested interests who are involved in retaining the present system and who will almost go to the stake to preserve and protect it. It is wrong, because it is very costly to the whole of our society, and among the principal sufferers are the young people about whom Deputy Deenihan is talking. Our whole economy and social fabric suffers. There is not a European country and there are perhaps few countries in the world where there is compulsory insurance and where 10 per cent or 12 per cent of the cars on the streets are uninsured, and openly uninsured, and as a result contributing greatly to the already exorbitant costs.
In 1987 insurers here sustained underwriting losses of £32 million on their motor portfolios. These losses increased to £48 million in 1988 and although I have not yet the final figures they expect a £120 million loss on motor insurance alone in 1989. Confronted with losses of that magnitude, and in order to maintain their viability, some insurers have considered it necessary to increase their premiums in line with their claims experience and/or to exercise more selectivity in the type of risk undertaken.
I understand that insurance for young drivers is at present available under four headings. This makes it very difficult for those who cannot get themselves in under one of the headings. The first heading is, renewal with the present insurer and the second is, motor insurers generally where such drivers have been named on their parents' policy and subsequently seek their own insurance. The third heading is, the PMPA who, apparently, are open for business from young drivers and, the fourth is, through the declined cases agreement. I do not have time to go into the declined cases agreement here but it works quite well. If a person who has not been able to get insurance submits to the  committee, or the appropriate section of my Department, five refusals in writing there is an almost 100 per cent success rate in getting cover offered to them but, of course, this cover may be at a very high level. Many of them may not feel they are in a position, unfortunately, to take it up but it does mean that people are not refused outright.
I am aware that when an insurance company quotes in respect of risks for young people the premiums are frequently regarded by those concerned as excessive. The cost of motor insurance for young drivers, however, tends to reflect the claims experience of motor insurers. While I sympathise with young drivers, statistical evidence has shown that they are much more likely to be involved in accidents and, therefore, cause more claims. Tragically, that is the case. The record of younger drivers generally is much worse than that of older drivers.
The cost of these claims can only be met by insurers if a realistic premium is forthcoming to cover the risk involved and one cannot expect the cost of insurance to come down when the number of accidents and claims and the cost of these claims are going in the opposite direction. I have figures to show that even up to the present year that is still the case. The fundamental cause of high motor insurance premiums for all motorists in Ireland is the high claims rate which, regrettably, is on the increase allied to the high cost of individual claims which is also rising. These factors bear on the level of insurance premia quoted to young drivers as well as to those quoted to more mature motorists.
I should like to give in conclusion some up-to-date figures. Last year the number of claims increased by 6.5 per cent while the claims rate increased by 2 per cent and the average cost of claims increased last year by 12 per cent over the already extraordinarily high level they were at in 1988. The number of people killed and injured last year increased. Indeed the total number killed and injured on the road in the first six months of this year has also gone up. While the Government  are doing what they can people will have to realise that we are faced with a very serious problem and all drivers, and would be drivers, will have to do what they can to contribute to a better situation than the one in which we find ourselves.
Dáil Éireann 402 Adjournment Debate. Motor Insurance Charges.