The Irish Insurance Federation (IIF) was accused of lack of competition and imposing 'penal' rates of insurance, particularly on young drivers, by a joint Oireachtas committee on enterprise and small business yesterday.
IIF chief executive Mr Michael Kemp defended the industry's high premiums, saying it was the large number of accidents and consequent insurance claims that was to blame for the high costs.
He called on the Government and the relevant authorities to implement measures to reduce the number of accidents on Irish roads. "Reducing the number of accidents is the best way to get premiums down," Mr Kemp told the committee.
Fine Gael TD Mr Andrew Boylan said he was convinced the insurance industry was operating a "cosy cartel" and did not believe there was competition among motor insurers. He said many insurance quotes were so high as not to be considered real and the industry was forcing people to bargain for insurance cover. "They are just fobbing you off with unrealistic quotes," Mr Boylan said, adding that only two insurers gave realistic quotes to young drivers.
Mr Kemp was asked to respond to claims by the Government-sponsored body - the Motor Insurance Advisory Board - which said insurers made profits on almost every class of driver.
The IIF, which recently published its own research into motor costs, said the board report was incomplete and its statistics implausible.
Mr Kemp said the IIF report, carried out by independent consultants Tillinghast-Towers Perrin, confirmed the industry was not overcharging.
He added that it was an open industry and there was nothing stopping new entrants coming into it with lower quotes.
"Insurers have no particular vested interest in seeing premiums increase or decrease. They only ask to be given the commercial freedom to manage their business and generate a reasonable return for shareholders." The IIF report looked at the risks associated with various classes of drivers. One of its findings showed young, inexperienced males carried an eight times higher risk than older males with experience.
Labour TD Mr Pat Rabbitte accused the IIF of not giving the Motor Insurance Advisory Board access to the data it required and said he found it strange the the IIF could allow an "implausible" survey be carried out by a body of which it was part.
The board had been invited to yesterday's meeting but declined saying it felt it should report to the Minister, Mr Noel Treacey before appearing before the committee.
