Insurers facing 'super tax' if they refuse to cut premiums
On the back of higher profit margins
Insurance companies are facing a special levy if they do not reduce premiums.
Minister of State for Finance Michael D'Arcy said profits for insurers were surging, but he warned them the Government will not allow a situation where they "pocket all the profits".
Mr D'Arcy told insurers he wants to see premiums falling, especially as legislation has been passed in the Dáil that will allow judges to reset the guidelines for the level of minor personal injury awards.
"If they don't lower premiums it becomes a budgetary matter, if the Government chooses to deal with it, in terms of additional taxes," he said.
"I want insurance companies to be fair to their clients, to their customers, so that if they are making profits they don't pocket all the profits, and they reduce the premiums."
It comes as it was revealed at an Oireachtas committee that leading insurers made profit margins last year that were double what they had targeted.
This emerged when Axa, Allianz and FBD appeared before the Oireachtas Finance Committee to deny ripping off consumers and businesses by making big profits.
Fine Gael Senator Kieran O'Donnell forced the three insurers to acknowledge that they are making much higher profit margins at the moment than they had targeted to make.
He was told that Axa made profits of €89m in this country last year on premium income of €770m. This gave it a profit margin of 11.5pc, compared with a target of 5pc.
FBD made profits of €50m last year, a profit margin of 13.4pc compared to a target of 8pc. Allianz had targeted a 6pc margin but made €37m profit, a 7.4pc margin.
The higher-than-anticipated profit margins meant the companies were making super profits, Senator O'Donnell said.
"The three insurance companies - who are edging on 50pc of Irish market share - totalled a combined super profit of €70m for 2018 over their targeted profit margin.
"This is an incredible figure and absolutely must be passed back to customers in reduced premiums with immediate effect."
Mr D'Arcy, when asked on RTÉ radio's 'Morning Ireland' if insurers were profiteering off people's misery, said: "The insurance companies are doing very nicely. They are making significant profits."
He said it was appropriate that insurers make profits, and added: "But I do not want them to be profiteering."
Mr D'Arcy has written to all the main insurers, calling them into meetings this month to explain why they are not cutting premiums.
Justice Minister Charlie Flanagan recently accused the industry of profiteering.
Meanwhile, the Alliance for Insurance Reform is calling on the judiciary to act speedily after the passing of the Judicial Council bill in the Dáil.
The legislation, which is due to finish next year, will see seven judges review the guidelines on what is paid for minor injuries.
"The onus then is on the judiciary to move swiftly in the interest of the common good," said Peter Boland, director of the alliance.
Mr D'Arcy said the judicial council will be set up straight away.
He said he will not have much control once the council is set up, but he has set down a desired timeline and is hopeful that the new guidelines committee will be in place by the end of this year.