MIAB completes its remit and publishes its final report.

“Report holds no punches”

Minister for Enterprise, Trade and Employment, Micheál Martin, T.D., today (Tuesday 30^th 2004) announced the publication of the final report of the Motor Insurance Advisory Board (MIAB).

Welcoming the report Minister Martin said, “This report marks the last action in a very effective term of office for the MIAB and I thank the Board and its chairperson Dorothea Dowling for their important work in this area. The report shows that after several years of substantial and escalating increases in insurance premia significant decreases have occurred for most motorists. The report also shows that insurance companies are again making substantial profits and that there is plenty of scope for greater reductions. The changes that have occurred in the area of insurance show how excellent the original study and recommendations of MIAB were and no doubt, equally this new report, which holds no punches, points the way for action that will lead to continued reductions in motor premia.”

“The success to date in driving the insurance reform programme clearly shows how effective co-ordinated actions across various Departments and Bodies can be,” Minister Martin added.

The 2004 report includes details of the progress of the Government’s Insurance Reform Programme Action plan to implement the 67 recommendations of the 2002 report of the MIAB. This Action Plan, aimed at improving the functioning of the insurance market, in order to facilitate reductions in the cost of insurance premia for consumers and businesses, was at the core of the Reform Programme and this report gives a commentary on progress on the implementation of the MIAB recommendations.

“It is a major achievement that 52 of the 67 MIAB recommendations have now been fully/partially implemented. Major reforms such as the commencement of the Personal Injuries Assessment Board (PIAB), and the enactment of the Civil Liability and Courts Act 2004 have now taken place,” Minister Martin said.

The Report shows many individual policyholders have done very well and examples provided by the MIAB for 3 specific companies between March 2003 and March 2004 indicate the following reductions:

• 10% to 16% in comprehensive insurance for a 30 year old male,
• 10% to 41% in comprehensive insurance for a 50 year old female,
• 10% to 45% for third party, fire & theft insurance for a 21 year old male.

CSO statistics show that there was a reduction of 20% in motor car insurance between April 2002, when the first MIAB report was published, and October 2004.

Minister Martin said, “These reductions reflect this Governments efforts to ensure that both consumers and business reap the benefits of a strong competitive insurance market. The work of the insurance reform programme continues and this report clearly identifies the ongoing work that needs to be done to provide continued reductions in insurance premia.”

“In this regard the Irish Financial Services Regulatory Authority (IFSRA) under the aegis of the Minister for Finance now regulates and supervises insurance undertakings since its establishment on 1st May 2003. The Minister for Finance retains overall responsibility for policy and legislation in relation to the provision of financial services in Ireland, including insurance. The Minister for Transport has taken over the lead role in relation to policy and legislation on the availability and cost of motor insurance and any related inter-departmental coordination. Posts have recently transferred from my Department to the Department of Transport to give effect to this change.

“The primary ongoing insurance focus of my Department will be competitiveness and competition (in conjunction with the Competition Authority). My Department will also retain responsibility for the PIAB,” the Minister concluded.

Copy of the MIAB Report available at:- http://www.djei.ie/corporate/insurancereform/miab2004.htm

For further information contact Dorothea Dowling, Chairperson, MIAB – 087/2460188

Notes for editors

MIAB Recommendations- summary of responsibility and completion by the relevant Minister or Body

Future of Insurance (motor, employer liability and public liability) Regulation, Policy and Policy Implementation

The Department of Enterprise, Trade and Employment’s lead role in the Insurance Reform Programme, with the exception of PIAB, has ended. The primary ongoing insurance focus of that Department will be from the horizontal competitiveness perspective and competition (in conjunction with the Competition Authority). The Irish Financial Services Regulatory Authority (IFSRA) under the aegis of the Minister for Finance now regulates and supervises insurance undertakings since its establishment on 1st May 2003. The Minister for Finance retains overall responsibility for policy and legislation in relation to the provision of financial services in Ireland, including insurance. The Minister for Transport has taken over the lead role in relation to policy and legislation on the availability and cost of motor insurance and any related inter-departmental coordination. Posts have recently transferred from the Department of Enterprise, Trade and Employment to the Department of Transport to give effect to this change.

It will be the responsibility of the Minister for Transport to take forward the coordination of the Government’s response to the issues raised in this and previous MIAB reports and to consider what further action may now be necessary on foot of the MIAB report 2004.

Examples of the many recommendations that emerge from the information provided in the final 2004 MIAB report.

MIAB calls for

• One Minister to have overarching responsibility for motor, employer and public liability insurance, including monitoring the impact of various EU directives on the cost of insurance which is crucial for the competitiveness of the Irish economy and significant for the cost of living of private policyholders
• Continued emphasis on road safety and accident prevention, with introduction of a traffic corps who could also undertake forensic accident investigations to curtail the expense of expert witnesses in cases involving liability disputes
• Measures to curtail the level of recoverable litigation costs which will continue to arise on claims which require an oral hearing, especially given that the delivery overhead has risen from the 42% average demonstrated in the previous report to 46% in 2003 prior to the establishment of the PIAB for cases which do not require Court adjudication
• The establishment of an independent Legal Services Ombudsman to protect the interests of consumers and to provide redress for non-compliance with the Solicitors (Amendment) Act 1994 which has been identified by reports both from the Committee chaired by Mrs Justice Susan Denham and from INDECON for the Competition Authority

• Future analyses of insurers’ raw data by IFSRA in the same format as that undertaken to date by MIAB in order to provide consistency so that reliable conclusions can be drawn which ensure payback to premium paying policyholders from the Government’s Insurance Reform Programme

• Given the facts - that the cost of tort in Ireland estimated at 1.6% of GDP is exceeded only by the USA at 1.9%; that the average Commercial motor claim has doubled in cost to €10,000 over the four years to 2002; the fact that less than 1% of claims involve serious injury defined as valued at over €100,000; and the continuation of double compensation despite the recommendations of the Law Reform Commission- that a review be undertaken of the levels of compensation for moderate injuries, and of the growing trend of higher levels of duty of care with increasing frequency of stress claims, in the light of measures taken in other jurisdiction such as those outlined in the report from the Committee chaired by Mrs Justice Susan Denham and most immediately that the jurisdiction of the Circuit Court should NOT be increased from €38,000 to €100,000 as proposed in the Courts Act 2001

• The introduction of regulations for renewal notices for Commercial Motor Policyholders that will provide information in sufficient time to obtain alternative quotations both in the domestic and EU insurance markets

• The implementation of recommendation 47 (of the 67 original MIAB recommendations) in relation to hospital bills which discriminate against victims of Road Traffic Accidents i.e. review of Health (Amendment) Act 1986

• The implementation of recommendation 15 (of the 67 original MIAB recommendations) in relation to the introduction of a regulation relating to the “unbundling” of charges for motor insurance, by requiring standardised renewal notices, which would include showing all intermediaries’ commissions

• Implementation of MIAB recommendation number 34 (of the 67) which relates to insuring the vehicle, as in mainland Europe, rather than the use of the vehicle as in Ireland; implementation of MIAB recommendation 35 which relates to Irish citizens rights to sue insurers direct; and implementation of MIAB recommendations 36 & 37 to uphold the EU law rights of victims of uninsured accidents on no less favourable terms that other injured parties, particularly given that the cost of uninsured driving has halved between 2001 and 2003.

TERM OF OFFICE – 28 AUGUST 1998 TO 30 SEPTEMBER 2004