Motor insurance premiums have fallen by between 15 and 22 per cent over the last 12 months, depending on whether the Central Statistics Office or the Automobile Association is believed.
The Government is happy to attribute this improvement, and a 25 per cent fall in employer's liability insurance costs, to the reform programme instigated in September 2002. But many elements of the plan, which is intended to cut insurance premiums by 30 per cent, have only just come into effect or will do so shortly. As such, they could have had little direct impact on insurance costs.
The centrepiece of the plan, a Personal Injuries Assessment Board to cut the cost of bringing claims, only opened its doors for business at the start of June and will not extend its mandate to deal with motor insurance and public liability claims until next week. By the same token, a raft of judicial reforms aimed at thwarting fraudulent and exaggerated personal injury claims has only recently passed all stages in the Oireachtas.
In fact, the only area of the plan which has been implemented to any significant degree is the introduction of the penalty points system.
Other factors clearly contributed as much, if not more, to the fall in premiums as the Government's reform agenda. Not the least of these is the recovery in investment markets which boosted the coffers of insurance companies. This allowed them to cut premiums in the face of growing political and consumer pressure.
Arguably the Government and the Tánaiste's decision to make insurance reform a political priority has been as big a factor in bringing down prices as the actual policies implemented to date. The coming into effect of the main elements of the plan, combined with continued public pressure on the insurance industry, augurs well for further falls in insurance costs.
To this end the Tánaiste is publicly courting international insurance companies in the hope that they will enter the Irish market and provide competition for the incumbents. There were signs this week that her efforts have been successful. Brit Insurance, the second largest quoted general insurer in the UK, has been licensed to trade here, while two US companies and one South African insurer are in the process of applying for licences. No doubt the combined pre-tax profit of €747 million made last year by the 20 non-life insurers already operating here has whetted their appetite.
The prospect of a number of new players entering the market will hopefully keep the pressure on the existing players to deliver better value to their customers. Equally, the recommendations of the Joint Committee on Enterprise and Small Business, which were published yesterday, are to be welcomed. While manifestly playing to the gallery with its call for a return to 1999 prices, it constitutes further pressure on the insurance industry to bring prices down.