The body responsible for motor insurance reform claims that there is scope for premiums to fall further than the 20 per cent reduction of the past 30 months. John McManus reports.

In its final report to the Government, the Motor Insurance Advisory Board (MIAB) says that insurance industry data for the current year should indicate "scope for much more significant premium reductions than seen to date".

But it has warned that these reductions could be put at risk if its successor, the Irish Financial Services Regulatory Authority (IFSRA), does not adopt a consistent approach to analysing industry data to identify savings that can be passed on to customers.

Any change in approach will "will leave it open for insurers to rightly assert that at least five years' consistent data are necessary to draw reliable conclusions", according to the MIAB's report.

The board has also criticised the decision to disperse its functions between IFSRA and a number of Government departments. It argues that there is a need for a minister with an over-arching brief for insurance reform.

The chairwoman of the MIAB, Ms Dorothea Dowling, yesterday said: "The fear now is that political pressure is off and focus will shift before full potential savings are realised. Not only could we lose progress but the position could get worse than ever."

It also criticises IFSRA for introducing regulations for motor insurance brokers which result in classifications that are "unintelligible to the consumers and may even be misleading".

The final report says that 52 of the 67 recommendations made by the board in April 2002 have been implemented.

Of the 15 outstanding recommendations, six are the responsibility of the Minster for Transport and five have yet to be implemented by the Minister for Justice.

"Given that the Government's Insurance Reform programme published in October 2002 is only two years down the line, there is immense scope for more than the 20 per cent reduction in charges secured to date and obviously much greater potential savings from the full reforms than the 36 per cent originally estimated by Irish Insurance Federation," Ms Dowling said.

Other threats to lower premiums identified by the MIAB include rising legal costs and the attitude of the judiciary.

Judges must support the objectives of the reform programme, "including measures to tackle exaggerated and unfounded claims" that have been incorporated into new legislation, the report says.

Litigation costs have risen from 42 per cent to 46 per cent of the overall cost of settling claims since its initial report, claims the board.

Although the creation of the Personal Injuries Assessment Board should reduce the number of cases going to court, high legal costs will still be a significant factor in settling cases that do go to court.

"If judges continue to give out large sums for relatively minor injuries, or just trauma, on the slimmest negligence grounds the new 'foreign' underwriters who are dipping their toe into the Irish market may scarper quite quickly," said Ms Dowling.

The board has recommended the establishment of an independent legal services ombudsman.