On 6 October, Cyril Roux, Deputy Governor (Financial Regulation) at the Central Bank, made opening remarks at the Committee on Finance, Public Expenditure and Reform, and Taoiseach which is looking into the rising cost of motor insurance premiums in Ireland. Mr. Roux set out the Central Bank's role in the regulation of motor insurance in Ireland and made clear that the Central Bank cannot intervene to set the rates of premiums.
Mr. Roux set out a series of factors that have contributed to the increase in motor insurance premiums in recent years, including: the decrease in premiums and investment income; increased claims frequency due to increased activity in the economy; increased claim costs due to changes in court limits, the introduction of Periodic Payment Orders and the potential impact of lower discount rates; and the low interest rate environment.
Mr. Roux attributed the large upswing in premiums to prices previously being artificially low due to a delay in insurers responding to claim costs increases. He commented that this delay was due to insurers assuming claim costs increases were cyclical rather than structural and some insurers making a commercial decision to keep their premiums below the break-even point in order to maintain market share.
Mr. Roux stated that policies that reduce the number of road traffic accidents and reduce the volatility of claims factors would contribute to more sustainable insurance premiums.
A link to the statement is here.