Dáil Éireann díospóireacht -
Wednesday, 18 Dec 1991

Vol. 414 No. 9

Written Answers. - Single Market Implications for Insurance Industry.

Mervyn Taylor

Ceist:

34 Mr. Taylor asked the Minister for Industry and Commerce if he will give details of the studies, if any, that have been conducted by his Department to assess the implications for the insurance industry of the Single Market; and if he will make a statement on the matter.

Ruairí Quinn

Ceist:

37 Mr. Quinn asked the Minister for Industry and Commerce if he will outline the assessment on job losses which has been made by the Government in respect of its decision to abandon the derogation on the Freedom of Services Directive within the EC; and if he will make a statement on the matter.

Minister for Industry and Commerce (Mr. O'Malley)

I propose to take Questions Nos. 34 and 37 together.

At the outset I wish to stress that my role in relation to the insurance sector is primarily a regulatory one which seeks in the first instance to ensure that it operates in a prudent fashion in the interest of its obligations to policy holders. In addition, I am also concerned to ensure that it operates in a framework which promotes competition in the areas of policy conditions and premium rates, which improves the availability of insurance overall to the benefit of insurance consumers, and which allows insurers here to expand and develop on both the home and European markets. I have no function with respect to the allocation of employee resources within the industry.

The completion of the internal market in the insurance sector is, in my view, manifestly conducive to the achievement of the policy objectives which I have outlined. In the context of the question raised by Deputy Quinn, no specific assessment of job losses in the industry has been carried out because I do not accept the premise underlying his question. I would however refer the Deputies to, for example, the Indecon study published in 1990 into the implications of the Single Market for the financial services sector, including the insurance area. That study concluded that employment levels in general, as well as insurance earnings, should increase as a result of the completion of the internal market, and that it would create expanded opportunities for institutions to develop their businesses with consequent employment spin-off.

The insurance sector is regularly consulted on, and kept informed of, developments in the negotiations on insurance internal market measures and their corresponding implementing measures. That applied in particular to the decision not to avail of the special transitional periods for implementation of the Second Non-life Insurance Services Directive where, in addition, account was taken of the views of the main union concerned, the CII and the relevant Oireachtas Joint Committee. While there was not unanimity on the matter, my own conclusion was that the overall balance of advantage, having regard to the policy objectives which I have just outlined, lay in not adopting those measures.

There is no reason to presume that job losses will occur as a result of the dropping of the special transitional measures. On the contrary, employee levels in the insurance industry have shown a steady increase since the advent of the right of freedom of establishment for foreign insurance companies since 1976 for non-life insurance and 1984 in the life sector. Furthermore it is expected that the opening up of the market and consequent increased competitiveness among insurance companies should allow other industrial sectors here to avail of cheaper insurance with consequent savings in costs.