Car insurance companies have been accused of misleading a Dail committee and operating a cartel following the release of a damning Government-backed report on motor insurance costs.
The interim report of the Motor Insurance Advisory Board (MIAB) - published in The Irish Times on Saturday - found that drivers under 25 were among the most profitable customers for motor insurers and that women drivers were paying over the odds. Mr Charles Flanagan, the Fine Gael spokesperson on Enterprise Trade and Employment, said yesterday the Tanaiste, Ms Harney, should "prepare a Government plan to take on the insurance industry, with a particular focus on the cost cartel of motor insurance".
Mr Flanagan said: "while insurance companies have consistently justified astronomical premiums for under-25s because they constituted high-risk, loss-making business, the reality has now been revealed to be totally different. The MIAB report shows the only loss-making group to be the under-18s."
Mr Joe Higgins, the Socialist Party TD and member of the Joint Oireachtas Committee on Enterprise and Small Business, accused the Irish Insurance Federation (IIF) and insurance companies of misleading the committee. "I listened intently to several representatives from the insurance companies make submissions to the committee in recent months where they swore blind that they made no profit from young drivers. They vehemently defended their massive premium rates for young drivers on this basis," he said.
Mr Higgins said he would be writing to Mr Ivor Calelly, the chairman of the committee, seeking a meeting of the committee to discuss the recall of the insurance companies to explain the situation.
The IIF - which is represented on the MIAB - said the report was based on incomplete data and that it had serious reservations about both the methodology used and the findings.
The report - which was released under the Freedom of Information Act - does not note any objections from the IIF about either the methodology or the findings. It states "the IIF has received copies of all reports for the purposes of checking our calculations but their responses do not identify any mathematical errors".
The MIAB also noted that the IIF had threatened to stop providing the raw data on which the board was working. "If the IIF do not provide the raw data, the majority of the board believes that it may become necessary to recommend an alternative and more rigorous forum for the investigation in this area of public concern".
Mr Michael Kemp, the chief executive of the IIF, said yesterday that the "federation and its member companies are co-operating fully with the MIAB to establish the full facts on these issues".
Mr Kemp repeated the IIF assertion that insurance companies do not make money insuring young drivers. The MIAB found that during the five years from 1993 to 1997 "every age of policy holders contributed more in premium than claims cost except for the small number of policy holders aged 17 and 18".
They also found that insurance companies were making profits of £211 per policy on people aged 22-24 compared to £60 per policy on those aged 4655. Other findings included profits of £730 per policy on women drivers aged 19 to 20.
Mr Kemp said that the IIF had retained its own consultants to carry out a review and analysis of market premiums and claims data.
"We are confident that that exercise will authoritatively and accurately establish the cost of insuring different categories of motor insurance risk and will confirm the validity of insurers' rating decisions".
The Motor Insurance Justice Action Group accused the Government of sitting on the preliminary report, which was completed last June. The final report is due before the end of the year.
