The greatest single contributor to reduced insurance costs would be significantly improved road safety, according to the action plan published yesterday.
The plan includes the estimated reduction in the cost of claims expected from each of the 67 specific measures outlined. Many of the recommendations are not expected to have any cost- reducing effect. However, they are considered important to the overall strategy.
The single greatest reduction in costs is given to improved road safety, with the plan assuming a total reduction in claims frequency of 10 per cent over the next three years. This would, in turn, lead to a 10 per cent reduction in claims costs.
The second greatest reduction expected from the plan is from the creation of the Personal Injuries Assessment Board, which it is expected will contribute a 7.6 per cent reduction in the cost of claims.
The third highest reduction is to come from new measures to combat uninsured driving. These measures, which will include provision for greater fines and vehicle confiscation, are expected to bring about a 5 per cent reduction in costs.
Another recommendation expected to produce a drop in costs is the abolition of the insurance stamp duty or levy. Abolishing the levy could produce a 2 per cent drop in costs, according to the plan.
However the Tánaiste, Ms Harney, yesterday pointed towards the state of the public finances, indicating that such a move is unlikely in the near term.
Other recommendations expected to bring about a reduction in the cost of claims include: the reform of the courts system (2 per cent); anti-fraud measures (1.75 per cent); exclusion of earnings from the black economy from loss of earnings calculations (1.5 per cent); and reduced plaintiff solicitors' fees (1.5 per cent).
The cost reduction estimates are those of the Irish Insurance Federation (IIF). The target plan draws attention to "the tentative nature of the IIF estimate and that cost reductions will be achieved over a number of years in an inter-dependent manner".
In a submission to the Government's implementation group in August, the IIF said: "In normal circumstances, a 5 per cent reduction in claims costs indicates approximately a 4 per cent reduction in premiums."
However, a spokesman for the federation said yesterday that this was a broad measure, that competition would play a key role, and that the scenario may be complicated by the fact that insurers are "not making profits" at the moment.
The group, in its submission, emphasised that the estimates of cost reduction are simply that, estimates. "In all cases our estimate of the effect of implementation assumes that all other cost conditions remain unchanged. Of course, this equilibrium never occurs in practice in a dynamic marketplace where a large number of elements influence claims frequency and severity, compensation costs, legal costs and administration expenses."
The group also emphasised that the estimated cost savings might not be realised until some years after the measures have been introduced. "Many of the cost savings will not be immediate but will build up over a number of years."
