Dáil Éireann - Volume 474 - 11 February, 1997
Written Answers. - Motor Insurance Premiums.
Cecilia Keaveney Cecilia Keaveney
234. Cecilia Keaveney asked the Minister for Enterprise and Employment the policy options, if any, open to his Department in respect of dealing with the increases in motor insurance premiums which are occurring in an alarming manner and in many cases pricing many motorists out of car insurance altogether; and if he will make a statement on the plans, if any, his Department has for encouraging safer driving and realistic car insurance prices. [3793/97]
Cecilia Keaveney Cecilia Keaveney
235. Cecilia Keaveney asked the Minister for Enterprise and Employment the statistics which are currently available or research which is currently under way to compare the prices of insurance premiums among the various categories of drivers in Ireland with other categories in other European countries; and if he will make a statement on the matter. [3794/97]
Minister for Enterprise and Employment (Mr. R. Bruton) Richard Bruton
Minister for Enterprise and Employment (Mr. R. Bruton): I propose to take Questions Nos. 234 and 235 together.
With regard to the first question dealing with the issue of increases in motor insurance costs, I would refer the Deputy to the detailed and comprehensive reply given by the Minister of State with responsibility for commerce, science and technology to the House on this issue on 4 February 1997.
With regard to the second question regarding research into comparative motor insurance premiums in Ireland and other European countries, the results of a survey comparing the price of insurance premiums among various categories of driver in the UK, Denmark, France, the Netherlands and Ireland in incorporated in the recently  published Deloitte and Touche report on an economic evaluation of insurance costs in Ireland. This survey was based on premium quotations obtained from a number of insurance companies in each of these countries. The companies were asked for their rates for 1990, 1992 and 1994 in respect of 36 risk combinations covering different age and vehicle categories.
In general, the Deloitte and Touche survey found that Irish private motor insurance premiums were the highest of the countries surveyed. Excluding younger drivers, who pay higher rates everywhere, the UK was 48 per cent lower, Denmark 10 per cent lower, France 21 per cent lower and Holland 6 per cent lower. However, the report found that the differences in premium rates quoted between Ireland and the other European countries narrowed over the period 1990-1994.
For the information of the Deputy the detailed results of the comparative study are as follows:—
Comparison with the UK
Over the period 1990 to 1994, aggregate average Irish motor premiums quoted for the 36 risk types increased by 30 per cent whereas UK quoted premiums rose by 49 per cent. This reduced the gap between Irish and UK rates — total UK rates were 56 per cent of Irish rates in 1990, converging to 74 per cent in 1994.
The comparison is disproportionately affected by high UK rates for the 21 year age group, where UK rates for comprehensive cover exceed Irish. Eliminating 21 year olds from the comparison, UK rates on average are 52 per cent of Irish rates, unchanged since 1990.
For male drivers in the 27 and 40 age groups the differences range from 23 per cent to 30 per cent lower than Irish rates for comprehensive and 27 per cent to 47 per cent lower than Irish rates for non-comprehensive.
In summary, young drivers pay the same or slightly higher in the UK than in Ireland for comprehensive cover and about 33 per cent less for non-comprehensive, but otherwise Irish rates are about twice UK rates.
With regard to claims comparisons with the UK market, the difference in premiums is broadly proportional to the difference in motor claims costs in each State. Although UK drivers lodge more claims — car theft is more common in Britain — the average Irish motor claims estimate was over four times the UK average and the claims bill per registered vehicle — as a proxy for motor policy numbers — was nearly three times the UK's.
The difference is partly structural. Britain has relatively more claims involving low cost damage to vehicles, because they have a higher proportion of comprehensive policies which are offered with cheap no-claims bonus protection, and because they have more urban driving  characterised by low-speed “fender bender” collisions in traffic. Ireland has a large rural road network and a lower traffic density — nine private cars per km of road as against 56 in the UK — which increases the proportion of high-speed accidents involving personal injury.
Under the 1986 Health (Amendment) Act, Irish road traffic accident victims are charged an “economic recovery rate” which is twice the rate for VHI members or private patients, to be recovered against the insurance companies, whereas UK hospitals charge normal national health service rates.
Motor car spare parts are estimated to be 28 per cent more expensive in Ireland than in the UK — IIF Survey December 1995. A quarter of motor claims costs are due to material damage, of which perhaps half is due to purchase of spares. Deloitte and Touche estimated that spare parts prices contribute at most 3.5 per cent to the difference in claim costs between Ireland and the UK.
The cost of claims caused by uninsured drivers at 6 per cent is the same in both jurisdictions — Garda Siochána statistics.
Comparisons with other EU States
Deloitte and Touche found that, as with liability insurance premiums, comparison of motor premiums with Denmark, France and the Netherlands is complicated by different rating systems in each country.
Danish premiums are lower than Irish by 31 per cent on average, or by 10 per cent if young drivers are excluded. Denmark does not differentiate by age or gender but only by car type. Premiums reduce for every accident-free year. This means that by restricting all drivers in the questionnaire to three years accident-free driving the 21 year old is favoured; most drivers in this age group would not have three years driving experience. A major Danish insurer recently raised motor premiums by 50 per cent, and it is likely that Danish rates will soon match or exceed Ireland's.
Overall, the French rates are 25 per cent less than Irish, 21 per cent less if young drivers are excluded — young drivers' premiums are not as relatively expensive. French rates have risen by 23 per cent between 1990 and 1994.
The Dutch rates for comprehensive insurance are higher than Irish rates for the two larger motor categories, for the 27 year old and the 40 year old driver. Overall, the Dutch rates are 16.5 per cent lower than Irish, 6 per cent if young drivers are excluded.
In summary, the Deloitte study found that, for most categories of driver, there is a reasonably  competitive market for motor insurance in Ireland. Drivers belonging to groups characterised by maturity and good claims experience have seen their premiums reduce in real terms since 1990. Young drivers as a group and individuals with poor safety records will have limited choice of insurer and will face high premium costs in Ireland as elsewhere.
The report found that, following a period of rapid increases, motor insurance costs in Ireland have stabilised since 1991, and have declined for the most favourable risk groups. The motor insurance market is relatively as competitive as in the UK, and is equitable in that premiums are related to the claims experience of groups of drivers.
Dáil Éireann 474 Written Answers. Motor Insurance Premiums.