Cheaper motor insurance policies should be on the way, Minister for State Eoghan Murphy has told TDs and Senators on the Oireachtas finance committee.
Mr Murphy said the “massive uncertainty” created by the collapse of Setanta Insurance in 2014 had been removed by the recent Supreme Court decision that the State, not the industry should be liable for the estimated €90 million in outstanding claims.
Mr Murphy said he believed it would be a major breach of faith on the part of the industry if the court decision did not “help to reduce premiums”.
“The insurance industry has had a win here. It should have a positive impact on insurance premiums” he repeated.
There were he said many factors – from the size of court awards to interest rates set by the US Federal Reserve – which affect premiums, but the Supreme Court had removed “uncertainty” about the insurance industry’s exposure to claims against Setanta Policy holders.
It also removed the uncertainty about how much provision the industry would have to provide for “Setanta-like” collapses in future years.
However, the committee also heard from Fianna Fáil finance spokesman Michael McGrath that there could be bad news on the way for former holders of Setanta policies who have claims outstanding against them.
Mr McGrath said the State’s compensation scheme was capped at 65 percent of the court award or €825,000 “whichever is the lower”. Injured parties may therefore be able to take a case directly against drivers to make up the shortfall, he warned.
“It is a mess”, he said.
Mr Murphy replied that it was “too early to say” what would happen in regard to the eventual working out of more than 1,600 claims for risks covered by Setanta insurance policies.
Acknowledging that many of the 1,600 crash victims had been waiting up to a few years for payment of court-awarded compensation, he said some 250 cases had now been completed.
Pressed by Pearse Doherty TD, Sinn Féin’s finance spokesman, he said he did not anticipate any “unnecessary delays” in payments being made to the first tranche of 250. Work on the remaining ones would begin later this year, he said.
Mr Doherty said the insurance industry has “fleeced” their customers by not reducing premiums.
Committee chairman John McGuinness said the high cost of insurance is affecting business to the extent that it is causing the amount of the premium to be passed on to the consumer. “It is us that are paying these costs and they are fleecing the country,” he said.
Mr Murphy said the “general trend towards stabilisation” and the removal of uncertainty would have a positive impact and work was ongoing with the industry to reduce the impact of a range of factors. But he said taxi drivers had other aspects to their policies, including longer driving and public liability.
