MOTOR INSURANCE ADVISORY BOARD
17 April Report into the Insurance Industry in Ireland

MAG Ireland welcomes the launch of the Report of the Motor Insurance Advisory Board (MIAB), which has been eagerly-awaited.  We acknowledge the work of the board under the chairmanship of Dorothea Dowling, set up in September of 1998.  The report of 100 pages contains 67 Recommendations.

A copy of the annotated version of the report can be found at http://www.entemp.ie/cr/miab.pdf

MAG Ireland, in response to a newspaper advert, made representation to the MIAB about the cost of motorcycle insurance and was assured by the board that motorcycle insurance would be included in the investigation.  MAG Ireland also sought a place on the board to represent motorcyclists, in mid-2001; but this was denied due to the advanced stage of the investigation.  MAG does not have sight of the report, so cannot ascertain the scope of the motorcycle insurance investigation.

Some of the findings in the report include:

• Motor Insurance Premiums in Ireland, comprise 1.6% of GDP.
• Litigation costs, (legal and expert fees) add 40%, to every €1 paid in compensation, for injury sustained in motor accidents.
• Motor Insurers in Ireland, reported 11 times the total post tax profit, earned by their UK counterparts, between 1983 and 1999.
• Young male drivers, aged 17 to 20 years on Provisional Licences, produce very substantial insurance losses - they are involved in many Accidents, resulting in the most serious of claims, at a frequency, which is disproportionate to their representation as Policyholders.
• Charges for young female policyholders, are not justified by their claims costs, and these policyholders have been described by insurers, as "subsidisers".
• The Board has also registered particular concern, about the position of senior citizens and those managing disabilities.
• The consequences of uninsured driving, are becoming more acute, with the Motor Insurance Bureau of Ireland estimating that they add 8% annually, to the costs of claims, in the aggregate motor insurance market.
• Not all Claims, ultimately involve outlay: for all types of insurance cover in the years 1997 to 1999; 29% of claims were finalised at zero outlay. Of the cases involving outlay, only 4% of accidents are valued at over £30,000, and 80% are valued below £5,000.
• The market for private motor insurance, is not competitive, a situation, which is compounded by the fact, that Motor Insurance is compulsory, thereby limiting the usual market forces dictated by consumers. The level of mergers has reduced some 17 separate motor insurers back in 1993, into just 5 companies in 2001, some of whom moreover operate under, various product images, without the identity of the insurer, being apparent to our consumers.
• Vested interests and inefficiencies, may collectively account for as much as half the premium, paid by the law-abiding motorist.
• At the time of the presentation of this Report, insurers had not yet been able to submit their year 2,000 raw data to the Board for its analysis.

A new Irish Financial Services Regulatory Authority (IFSRA) will be set up, within which a statutory office of Insurance Ombudsman.

The Government, according to Minister Treacy, is very supportive of the broad thrust of the Recommendations in the report.  A high-level Implementation Group wil be set up to immediately progress the Recommendations and to report to Government not later than three months, from its inaugural Meeting. The Implementation Group will be chaired by Mr. John Corcoran, Assistant Secretary, Insurance and Company Law Division, of our Department of Enterprise, Trade & Employment. It will be representative of the Departments of Enterprise, Trade and Employment; Finance; Environment and Local Government; Justice, Equality and Law Reform; Social, Community and Family Affairs; the Consumers Association of Ireland; IBEC and the MIAB chair, Ms. Dorothea Dowling.

The Government will also introduce New Regulations, requiring Insurers to give adequate and proper "Notice of the Terms of the annual renewal, of each individual's Motor Insurance Policy", in the future. This will mean that the Consumer/Motorist will receive at least 15 days notice of renewal terms, along with an official Certificate of "No Claims Bonus", showing each Individual's record of "Accident free driving", up to the date of issue of the certificate.

In addition, the Report is being referred to both the Competition Authority and the Equality Authority, to allow them to take any necessary action on this Report.

The Motor Insurance Advisory Board has been given a six-month extension of its remit, up to the 31 December, next. The extension, which has the approval of the Government, is designed to enable the Board to monitor and report on progress, on its many Recommendations to us. There will be further work undertaken by the Board, during the additional six months of its life. I am aware that at the time of the presentation of this Report to me, insurers had not yet been able to submit their year 2,000 raw data, to the Board for it's analysis.

When that work has been completed, the Board will provide a Supplementary Report, which will also fully examine the area of Commercial Motor, as well as providing any available indications of the effect, that the introduction of the Euro, has had on Premium Charges and related matters.

MAG Ireland will examine the report in detail and issue its response as quickly as possible.