The State's five major insurance companies have promised to reduce prices for policy holders, the chairman of the joint committee on insurance reforms said today.
Mr Donie Cassidy was speaking at the publication of the committee's second interim report on insurance market reform.
He said policy holders have not been getting a fair deal from insurance companies for the past three to four years but that the industry had finally turned a corner "and now it's time for policy holders to reap the reward".
Industry profits surged by €747 million last year, surprising insurance companies that complained that the Irish market was a difficult one in which to operate, he said.
Profits for the largest player in Ireland increased by 332 per cent. These "substantial increases . . . will permit insurance companies to reduce their premiums," Mr Cassidy said.
He warned that substantial reductions will be needed if the cost of insurance, which skyrocketed between 2000-2002, is to return to 1999 levels. The increase has had "an appalling effect on business and consumers."
Many private businesses have had to put their whole enterprise in jeopardy simply because they can not afford the high premiums, he said.
Reductions have already begun to take place, he said, particularly in private motor insurance, but these reductions happened before recommendations made by the committee's first report were implemented.
The second interim report focused on six problem areas in the Irish market: the lack of competition and new entrants; excessive award levels; the need for increased protection and information available to policy holders; the high number of work and road accidents; the high costs of processing claims; and unnecessary costs throughout the system.
The goal of the proposals is to restore confidence in Ireland "as a safe place to do business," said Mr Cassidy.
The report listed 13 new recommendations, including that uninsured vehicles should be impounded, a dedicated traffic corps be established, voluntary governors be used on cars with drivers between the ages of 17-25, random breath tests be implemented to curb drink-driving and that road safety instruction become mandatory in second-level school curriculum.
The report also recommended that the Government prioritise the enactment of the Road Traffic Bill and the Driver Testing and Standards Authority Bill, the Competition Authority publish its final report on the insurance market by October, and that Irish solvency requirements for new entrants be the same as those for existing players and no higher than the norm required by EU regulation.
The report also recommended the Irish Financial Services Regulatory Authority review the insurance broker market with the aim of improving transparency for customers.
The Professional Insurance Brokers Association (PIBA), the country's largest representative body for brokers, has welcomed the findings of the Second Interim Report on Reforms to the Irish Insurance published today.
The Chairman of PIBA's Legislation Committee, John Hogan, said the association supported the setting of high standards in the industry with a view to making all aspects user-friendly for the consumer.
"In particular, I welcome the suggested return of the term 'Broker', which is easily and readily understood by all members of the public as someone who can offer choice in the marketplace. This follows on the recent report of the Competition Authority and it is now up to IFSRA, the regulatory authority, to progress the matter forward."
In relation to competency, Mr Hogan said PIBA, in a joint submission to IFSRA with the Life Insurance Association (LIA) and other bodies, has put forward a number of proposals and he looked forward to their early implementation.
Only seven of the 40 recommendations set out in the Joint Committee's first interim report, published last August, have been implemented. But Mr Cassidy said the report was "one Government document that had not been on a shelf gathering dust".
He said he welcomed the expected announcement by Tánaiste, Ms Harney, of the introduction of a major new player in the Irish market and hoped it would happen by September.
While the Irish Insurance Federation (IIF) endorsed a handful of the report's recommendations, the body criticised the proposal to relax solvency requirements for insurance companies, IIF Chief Executive Michael Kemp said, "We need look no further than the collapse of Independent Insurance in 2001 to see the devastating impact that the collapse of an insurance company can have on its policyholders. Politicians would be the first out of the blocks demanding stricter rules on solvency in the event of a company folding due to inadequate reserves to meet its claims."
Mr Kemp also said the recommendation that would require companies to inform policy holders two months before renewals "would increase the administrative burden on insurance companies, a cost that would be ultimately passed on to the consumer."
The IIF endorsed the proposed abolition of the 2 percent Government levy of premiums; the creation of a group to study the level of awards in Irish courts; a dedicated traffic corps; the impounding of uninsured vehicles; and the expansion of the penalty point system.