The Tanaiste has put the motor insurance industry on notice. Yesterday Ms Harney made it clear that she and her colleagues in government find the rate at which motor insurance premiums are increasing is unacceptable.
Ms Harney focused on the simple fact that motor insurance premiums are rising at three times the rate of inflation, at a time when motor insurers are doing more business than ever. Also the number of claims, if not their size, is falling, according to the Tanaiste.
She also raised the issue of competition. The consolidation in the global insurance market has seen the merging of several players in the Irish insurance market, meaning that consumers are faced with less choice than ever.
Ms Harney went on to raise the prospect of price controls if the industry proved incapable of finding its own way of bringing down premiums, or at least slow the rate of increase to an acceptable rate. The response from the Irish Insurance Federation (IIF) was equally simple. The cost of settling claims is rising faster that inflation. Claims account for 80 per cent or more of costs and as a result premiums have to rise in response.
No doubt there is right on both sides which only serves to underline the significance of the work being carried out by the Motor Insurance Advisory Board. The MIAB is conducting its own detailed study of the costs of motor insurance which will be published later this year.
The Tanaiste has also fired a shot across the IIF's bows in relation to its interaction with the MIAB, which has been difficult. When it became apparent last year that the board's interim report would be unfavourable to the industry, the IIF threatened to withdraw its co-operation. It subsequently commissioned its own study to rebut the MIAB's finding that the industry makes large profits on young drivers and loses money on only 3 per cent of its customers. Subsequently, the IIF has been less than prompt in providing the board with the data it needs to complete its task.
Ms Harney took the opportunity at yesterday's annual lunch of the IIF to remind the insurance industry that the Government "attaches a great deal of importance to the excellent work of the Motor Insurance Advisory Board".
She went on to tell them that the Government has committed itself to giving very serious consideration to it recommendations. When the board's report is published, Ms Harney will have to match yesterday's fine words with action.