Madam, - Your second Editorial of July 2nd is critical of the insurance industry's response to the introduction of penalty points but appears to confuse the potential to bring down claims costs with the actual realisation of savings.
I would like to reassure your readers that the insurance industry is by no means hostile to linking cost savings to lower premiums - essentially this is what our message has been for many years. If claims costs decrease, whether through improved road safety, lower compensation or reduced legal costs, then motor insurance premiums will come down. This, however, is not the same as discounting premiums before achieving those cost savings.
Your Editorial implies that the majority of insurers have not cut motor insurance premiums in response to improvements in claims frequency associated with penalty points.
In fact, in addition to the company mentioned, which has committed itself to a discount for drivers who do not incur penalty points, at least two other insurers have announced general reductions in rates in recent months (of 10 per cent in one case) and others have frozen their rates, leading to a real reduction in the cost of motor insurance.
The IIF and its members are very supportive of the penalty points scheme. We called for it for many years before it was finally introduced in 2002. Our recent comments on the importance of sustained law enforcement have been intended to underline the significant safety dividend which penalty points can deliver, provided the Government is committed to ensuring the success of the system.
Just like the Minister for Transport and the insuring public, insurers want to see penalty points succeed and we hope that the recent rise in road fatalities is not a sign that the hard-won improvements of recent years are being reversed. But unless we have high visibility, sustained and country-wide enforcement of the penalty points system, leading to a significant increase in both the actual and perceived chances of being caught for speeding and other offences, there is a distinct possibility that a very good idea in theory will fail to deliver the expected benefits. - Yours, etc.,
MICHAEL KEMP, Chief Executive, Irish Insurance Federation, Dublin 2.