Remarks by An Tánaiste and Minister for Enterprise, Trade and Employment Mary Harney, T.D., At the Insurance Institute of Ireland's Annual National Conference 2003 in the Marriott Hotel, Druids Glen, Co. Wicklow on Friday 12^th September 2003

'A competitive insurance market is essential for a competitive economy'

Insurance is one of those key services without which the modern world can simply not function. It enables enterprises to take risks. It enables individuals to engage with confidence and security in major transactions such as house purchase. And it enables society in general to manage risk on the basis of shared costs.

Insurance, therefore, is something which creates great public value. A smoothly functioning insurance market creates the conditions for a successful society and a prosperous economy. Equally, any failure in the insurance market poses a threat to the social and economic success of a country.

It had become increasingly clear in recent times that the insurance market in Ireland was not functioning smoothly. Several factors had conspired to push premiums to levels which were not sustainable. That is why the government has given such a high priority to insurance reform in its legislative programme.

On its return to office fifteen months ago the government set out a comprehensive programme to reform the insurance market and a clear path for the achievement of those reforms. This morning I would like to update you on the progress that we have made on this front.

The Personal Injuries Assessment Board has been established and is already operating on an interim basis. In May the government approved the priority drafting and general scheme of the bill to establish the PIAB on a statutory basis. It is planned to introduce this bill to the Oireachtas in the coming session and to have it enacted before the end of the year. I am confident that the PIAB will up and running and hearing cases early in the New Year.

My colleague, the Minister for Justice, Equality and Law Reform, Mr Michael McDowell, published in July of this year the general scheme of the Civil Liability and Courts Bill.

This legislation will reform the law on personal injury actions and give effect to several recommendations of the Motor Insurance Advisory Board. It is the government's intention to progress this bill in parallel with the legislation on the PIAB so that both come into effect at the beginning of 2004.

This bill contains a number of very significant reforming provisions. I would highlight the fact that it will introduce a requirement for a person to swear an affidavit in order to verify their pleadings in a case. If a person swears falsely they will be guilty of an offence.

The bill will provide also that if any element of a claim before a court is made in bad faith the whole claim will fail, subject to appropriate safeguards. This provision represents a determined effort on the part of the government to crack down on fraudulent claims.

This legislation is designed to eliminate fraud and reduce the costs of dealing with genuine claims. It is important too, however, that these measures are complemented by vigorous action to reduce the incidence and severity of accidents, particularly road accidents.

The Minister for Transport, Mr Seamus Brennan, has now taken a number of initiatives in this area.

The penalty points system, originally introduced to cover speeding offences, has now been extended. Penalty points now apply for the offences of not having insurance and not wearing seat belts and the points system will be progressively extended to cover a very wide range of motoring offences.

It is already clear the point's regime is having an impact on driver behaviour. It is helping to reduce accidents, to reduce injuries and to reduce fatalities on our roads.

I want to see a strong, vibrant and successful insurance industry in this country. I want to see an industry that is strong and profitable but I also want to see an industry that supplies insurance products to the market at an affordable price that is competitive relative to other European countries.

The government's reform programme will make the Irish insurance market a better place in which to do business. It will make the market more attractive for existing operators. But it will also make it more attractive for new entrants.

We have a successful track record in this country of bringing in overseas companies and foreign investment has been central to our whole economic success story.

I believe it is time now that we got the message out there that the Irish insurance market is being reformed very significantly, that the factors giving rise to high premiums are being addressed and that this is a market where there is scope for both premiums to fall and profits to rise.

It is important that we attract new entrants into the market. As economic recovery takes hold the market will expand and there will be plenty of new business there to fight for. I intend to meet a number of players in the insurance market in both Europe and America during the coming months and making sure that they are aware of the reforms which are taking place and the impact which they will have on the profitability of the sector.

I want to see premiums coming down to more realistic levels and I am glad to see the progress that has been made on this front. I am not so naive as to believe that premium reductions are made by ministerial request.

Commercial organisations don't respond to coaxing but they do respond to competition. We are going to have a more competitive insurance market in Ireland and I believe that this is in the long-term interests of everyone, both insurers and insured.

ENDS/ETE 1136