Official Report: Minutes of Evidence

The Chairperson (Mr O'Toole): With us from the Association of British Insurers (ABI), we have Alastair Ross, the assistant director and head of public policy for Scotland, Wales and Northern Ireland, and Mark Shepherd, assistant director and head of general insurance. We welcome both of you. Thank you for coming to give us evidence. Alastair is the lucky person who is going to give us a brief opening statement. Members, do indicate should you wish to ask a question.

Mr Alastair Ross (Association of British Insurers): Thank you, Chair, for the opportunity to speak to you this afternoon. The Association of British Insurers is the voice of the UK's world-leading insurance and long-term savings industry. We are the largest sector in Europe and the third largest in the world. That means that we represent more than 300 firms across the insurance space, including household names that you will recognise and also some specialist providers. It is all about providing peace of mind to our customers across the UK when they need our support.

On behalf of our member companies, we work with the Assembly, its Members and Committees across a range of topics. We also work regularly with the Executive through the Department of Finance, the Department for Infrastructure, the Department for Communities, the Department of Justice and the Department for the Economy. We have had dealings with all those Departments in the past six months or so. As you would expect, we also work with the UK's other Governments, with the Treasury in Whitehall, and with regulators, consumer organisations and non-governmental organisations. All that is about delivering our strategy and our purpose, which is to ensure that the industry is trusted by customers, that it is invested in people and the planet, and that it can drive growth and innovation through effective markets.

The industry in Northern Ireland supports around 5,000 full-time equivalent jobs across insurance companies, insurance brokers, loss adjusters, lawyers and other insurance-related professionals. The industry generates in excess of £240 million in gross value added for the economy every year. I stress that our members are committed to serving the Northern Ireland market. We have been talking with them about this afternoon's evidence session, and they have reaffirmed that ahead of this meeting. It is important to recognise that insurers serve their customers through a number of different channels. That can be directly through branch networks, which some still maintain, or through telephone and internet services direct to the companies. They can operate via insurance brokers or price comparison websites or by providing the insurance services that sit behind a range of different household brands from which people purchase their cover. That is reflecting the changing ways that people are buying insurance. Northern Ireland is similar to the rest of the UK in that regard. It is also reflecting the different approaches and strategies of the individual insurance companies.

As we said in our written submission to the Committee, we recognise the concerns that you have raised and expressed about home and motor insurance affordability in particular. As an industry, the ABI and our member firms are continuing to work to support customers. However, it should be noted that there are a number of issues beyond insurers' control, and that is where we need to work with the UK Government, the Northern Ireland Executive, our regulator — the Financial Conduct Authority (FCA) — and other parties to address some of those challenges.

One of the biggest factors that our members have identified and told us about the Northern Ireland market is the cost of insurance claims. When people bring forward claims under their policies, the claims can be more expensive. There are a number of factors behind that. Some of them are international or UK-level factors, such as the supply chain for replacement parts and materials. However, there are also factors specific to Northern Ireland that put additional inflationary pressure on insurers. Some can be addressed by the Executive with action there, some by our regulator at the FCA and others by parties such as the judiciary. There are two areas that I will draw your attention to.

On motor insurance, our data shows that personal injury claims here for motor vehicle claims are around 40% more expensive than the equivalent claims in Great Britain. That is for a number of reasons. There is the compensation guidance that is set by the judiciary. It is driven in part by unregulated claims management companies (CMC). It also partly reflects the way that the legal system works here in Northern Ireland.

In home insurance, construction methods in Northern Ireland can differ from other parts of the UK, as do heating systems and the risk of damage from leaks that they present.

The Chairperson (Mr O'Toole): Sorry, do you mean the preponderance of home heating oil?

Mr Ross: Home heating oil, but also the way that houses are constructed and where pipes are embedded.

The Chairperson (Mr O'Toole): I would say that there are more open fires here in general. People have more open burning fires here than in GB.

Mr Ross: Yes, I will defer to you on that. The main thing that we have seen is the oil-fired heating systems as opposed to boiler-operated ones. Again, a lot of activity by loss assessors and claims management companies can drive up the cost of claims. I am more than happy to go into more detail on that. As you have said, we have set out our written submission. We will be happy to expand on the points, and we will do our best to answer your questions.

The Chairperson (Mr O'Toole): OK. Thank you very much. That was helpfully concise. My first question is quite a broad one. This inquiry is focused on financial services in the round. That is, in a significant or large part, to do with not just banking but insurance, which is an inextricable part of the financial services landscape, so we thought that it was vital that we take evidence from you and that we reflect on that. One of the reasons for that is that many of our constituents, as I am sure you already know, reflect back to us a sense that, in general terms, particularly for domestic customers, insurance premiums are higher in Northern Ireland than they are in Britain. Is that true?

Mr Mark Shepherd (Association of British Insurers): I am happy to take that one, Chair. In our written evidence, we tried, to some extent, to address some of that challenge or some of that potential misconception in respect of the motor insurance landscape. We set out some general UK-wide statistics around how motor insurance premiums have been tracking. They have been rising since 2023, post pandemic. They were rising from probably an artificially low base because of the reduced driving behaviours and reduced accidents and claims that resulted from things such as lockdown. That potential spike in premiums was felt a bit more by people because they had reduced over lockdown, but, on a UK-wide basis, those average premiums are starting to reduce. If you look at those in real terms, taking into account inflation, they have tracked inflation pretty closely. Compared with 2017 levels, the average motor insurance premium on a UK-wide basis is £1 more than it was, taking into account inflation.

On a Northern Ireland-specific basis, we do not break down our premium calculations by UK region, but, in preparation for this, we identified a number of sources for quote-based comparisons, which can be useful in comparing Northern Ireland with other regions of the UK. Those are on quotes; they are not on the premiums that are actually paid by people, which can differ, but, as I said, they give a useful comparison. Data from CompareNI, which is a price comparison website specifically targeted to Northern Ireland, found that Northern Ireland was the third lowest of 12 UK regions that it compared in 2024, with an average of £671 for motor insurance. We contacted Compare the Market, which is a major price comparison website operating across the UK, and it provided us with a regional breakdown of the average cost of private comprehensive motor insurance from its data from March 2025, which showed Northern Ireland in the middle of the pack. There are 14 regions set out in the written evidence that we provided that came from Compare the Market, and Northern Ireland has an average for motor insurance of £650·93 in March 2025, which is the seventh of the 14 regions that are set out. Unsurprisingly, areas such as greater London, Yorkshire and the Humber — well, mostly those, but they generally tend to be urban areas where there are higher proportions of traffic density. It is intuitive that that leads to higher rates of accidents and, therefore, claims.

The Chairperson (Mr O'Toole): Further to that, would you not think that Northern Ireland would be even lower, because we are on the edge of a relatively small city, and we do not have very much urban sprawl in Northern Ireland? There is effectively one biggish city, a smaller city in the north-west and then some ancillary urban areas connected to Belfast. If you weigh that by rurality, we are possibly the most rural of some of those areas, so should we not be even lower?

Mr Shepherd: I think that there are some push and pull factors specific to the Northern Ireland market. To your advantage, as you identified, you have less concentration of urban areas and probably less complex road systems overall than what you might find in places like London, Manchester and the big cities in the UK. You also have lower rates of theft of motor vehicles in Northern Ireland compared with Great Britain. However, a disadvantage, as Alastair outlined in his opening statement, is that you have much higher bodily injury claims costs. When those claims for accidents happen and injuries occur, the compensation amounts that insurers are paying out are significantly higher for road traffic accidents in Northern Ireland. Our data also suggests that you have higher replacement vehicle claims costs. When you have an accident and your car is out of service for a while, you get a courtesy car or a replacement vehicle. Those costs tend to be higher in Northern Ireland, which is burdensome on the insurance company to pay those costs.

The Chairperson (Mr O'Toole): You have effectively said that the legal processes — the claims — are more expensive to process. Can you summarise why that is and what you think should be done about it?

Mr Shepherd: There are a number of factors. I will start, and I am sure that Alistair will come in. You have higher awards for damages, first and foremost. I think that we have set out some data that shows that the average claim for bodily injury in Northern Ireland is £22,800, whereas, in England and Wales, it is £15,700, and, in Scotland, it is £15,500. So the awards, which are set primarily by the judiciary, for various injuries, right through from whiplash to wrists and bruised knees to more serious incidents, are much higher in Northern Ireland. England and Wales have been through quite a significant reform programme for lower-value injury claims compensation to try and address some of the issues and how they are impacting on claims costs and premiums. Northern Ireland has not done that; it has not got there yet. The Civil Liability Act 2018 was introduced in England and Wales to set whiplash tariffs. There is nothing similar in Northern Ireland, and we would like to see something like that introduced to address low-value soft tissue injury claims.

You also have a higher cost associated because more claims are driven by claims management companies in Northern Ireland. There is a higher prevalence per person of CMCs operating in Northern Ireland, which tends to lead to more litigation and fewer settlements outside of court, driving up costs generally. That is not going to the claimant; it is going to either the CMC or the solicitor acting with the CMC. We would like to see reform of that area. Again, in England and Wales, claims management companies are regulated by the Financial Conduct Authority. That does not happen in Northern Ireland, so it is an unregulated sector.

Mr Ross: Following on from that, as Mark outlined, there is a consumer protection gap in Northern Ireland. The lack of regulation of claims management companies means that consumers in Northern Ireland do not enjoy the same level of protection or redress when things go wrong and they are unhappy, compared with consumers in GB. It is largely a historical issue. The UK Government legislated on it when Stormont was suspended, so there was not an opportunity for the legislation to go through this place. We now have a gap. If you use a claims management company in GB, you have recourse. If you are not happy with it, you can go to the Financial Conduct Authority and raise a complaint. You have that recourse. You simply do not have that protection here, so there is that distinction.

Mark talked about litigation. Northern Ireland seems to be a more litigious jurisdiction. People are more inclined to instruct a lawyer to represent them and to raise a compensation claim. Those claims tend to go very quickly to a civil bill. If a solicitor contacts an insurer on behalf of a client who is seeking compensation for injuries that were not their fault and that were sustained in a car accident or some other situation, the insurer will seek to clarify the detail so that it can evaluate the claim and work out how much to offer in compensation. In return, it will be met with a civil bill, so it is straight to litigation. There is a pre-action protocol to try to encourage early settlement of claims, which ultimately means that people will get paid compensation earlier in the process. However, as I say, Northern Ireland is quite a litigious jurisdiction compared with England and Wales or Scotland. You are quicker to take legal action, and you are quicker to escalate it to the court. The challenge then becomes the capacity of the courts. I spoke to one firm last week that said that it takes 165 weeks from the date of issue of legal action in the High Court to the date of disposal when the action is settled.

The Chairperson (Mr O'Toole): In England and Wales, is it much shorter than that?

Mr Ross: Much, much shorter.

The Chairperson (Mr O'Toole): OK.

Ms Forsythe: Thank you both very much for coming. I really appreciate your taking part in the inquiry. Thanks for the comprehensive written evidence. It is really good to have that. It gave us a more positive outlook than I had expected on the motor insurance piece, especially for 17- to 24-year-olds. I get a lot of casework about the fact that young drivers here seem to be a lot worse off than those in the rest of the UK. Is it possible to extract that age group from the data, or is it just on Northern Ireland as a whole? Is there any way that we can better monitor the data across the UK by region and pull out those particular age groups?

Mr Shepherd: I will cover the young drivers point first. Again, if we have not put this in the written evidence, we can certainly send it to you. It was not ABI data but price comparison website quote data that showed that, out of 12 regions in the UK, Northern Ireland was the least expensive for average motor insurance premiums for 17- to 24-year-olds. That is an average, so not everyone will be in that camp. Insurance for 17- to 24-year-olds is significantly higher, on average, than it is for other age groups, but there are reasons for that, unfortunately. We see a much higher proportion of accidents involving 17- to 24-year-olds than other age groups. That then leads to more claims and more compensation payouts for insurers. That is why, unfortunately, they tend to face higher average premiums when they start driving.

The other thing on young drivers — a change that we would like to see — is how can we, as a community, help support young, newly qualified drivers to gain better driving experience? In our view, that includes things such as a graduated driver licensing system, which would give young people more experience, in a graduated way, of different road conditions, be that driving in the wet, in ice or snow, or at night. It is about building up their confidence to drive in a safer way. There is evidence to show that, where those systems have been implemented in other countries in the world, they have had a real impact on reducing the number of deaths and serious incidents involving young people on the roads. We think that that is a really important point.

Having grown up in Northern Ireland, I know fine well — I am sure that Members do as well — that Northern Ireland does not have a very good road safety record. We very much support the road safety strategy to 2030 that is being developed by the Executive, but we want to see action and evidence of that working to reduce deaths and serious injuries on our roads.

Alastair, do you want to pick up the point about the breakdown of data?

Mr Ross: We can certainly ask and make those enquiries. As Mark said earlier, we are unable to disaggregate the premium data that we have down to a Northern Ireland level, so we would not be able to do that for younger drivers as well. CompareNI says that it has more than 80 insurance providers in its network. We have also seen other research that suggests that there are circa 90 or so insurers offering to underwrite insurance in Northern Ireland. That is where the research sits. There is certainly a market there, but we do not hold the data that would provide the breakdown that you are looking for on the impact on the young driver cohort.

Just to reinforce what Mark said, the data from the PSNI shows that young people — those aged from 16 to 24 — were involved in 20·5% of what it calls "killed or seriously injured" accidents, so the most serious accidents, yet young drivers make up only 9% of the driver population. Therefore, we still have this challenge, which is graphically demonstrated, maybe not every weekend but certainly every month: young people, late at night, rural roads, a car full of their friends, and there is a collision and serious injuries or, unfortunately, fatalities. Northern Ireland is running at about twice the rate of the target for the 2030 road safety strategy. Getting that fixed or getting it right will reduce the rate where Northern Ireland has 29 road deaths per million people, compared with 25 per million in England. Tackling that is going to have a direct impact on the risk from a motor insurance point of view.

Ms Forsythe: You talk about the higher average cost of replacement vehicles, the claim costs and personal injury claims. Do you think that there is any viable means by which we can address those factors while still respecting the independence of our legal system?

Mr Ross: Yes, absolutely. The costs that you are talking about tend to rack up. If your car goes in for repair, the parts may need to be brought in from elsewhere, so that extends the period that it is in the garage and that then increases the length of time that you need the hire car for. If repair times can be improved, there is greater garage capacity or supply chains can be improved, you will be without a car for a shorter period of time. Those kinds of things can be addressed.

The judiciary in Northern Ireland has introduced a pre-action protocol specifically looking at what is called credit hire. That is the industry term for these replacement vehicles. That is starting to show signs of having some effect but, like most other pre-action protocols in Northern Ireland, it is not mandatory. If you do not want to comply with that, you just do your own thing, and the repair or the credit hire may take longer than it absolutely has to. There are no sanctions either, so, if you do not comply, there is no punishment, fine or other restriction placed on you. We would look to see action there, but it is not a role for the Department of Justice or the Assembly. It is something for the judiciary to take a look at, I suggest.

Mr Shepherd: I would add that there are some broader things that are not specific to Northern Ireland that would help: for example, working with the police to tackle insurance fraud and uninsured driving. All premium-paying customers are paying for incidents involving either insurance fraudsters or those who have not taken out insurance. You should work with the police to combat vehicle theft. Although rates are lower in Northern Ireland, more could be done there. It is not specific to Northern Ireland, but lowering insurance premium tax is something that we would strongly advocate with the UK Government. Some 12% of everybody's premium is going to the Government in insurance premium tax. I do not think that many people are aware of that. As premiums have gone up over the past couple of years, the Exchequer has clearly been getting much more for that 12%, so Treasury intake from insurance premium tax has gone up significantly. We would like to see the insurance premium tax lowered, because those people are doing the responsible thing by taking out insurance to protect their assets or themselves against an accident on the roads that might not be their fault. They should not be punished or disincentivised by having the tax placed on them, and the tax percentage has increased over the past decade, from 6% 10 years ago. We would like to see that changed.

Ms Forsythe: Finally, what is your assessment of the risk of insurers pulling out of Northern Ireland because of the disparities with GB on some of these things?

Mr Shepherd: There has been quite a bit of talk about the size, capacity and competition within the Northern Ireland market. Our broad assessment is that the market is still very competitive for motor and home insurance. It is not as competitive as the rest of the UK, and there are more providers there. The risk is that insurers will pull out of what we call personal lines insurance in the UK as a whole, and that is not a risk specific to Northern Ireland. We have seen two major providers, Royal & Sun Alliance Insurance and Zurich Insurance Group, pull out of offering motor and home insurance in the UK over the past few years because it has become much more difficult for them to make a profit. That has been driven by the cost of claims, inflation, supply chain difficulties and the rise in the cost of claims that we have seen over the past few years, which has made it untenable to continue. It is a risk that is not specific to the Northern Ireland market; it is a risk for the UK and wider Europe as a whole.

The Chairperson (Mr O'Toole): Just a reminder, folks: we have a hard stop at 1.45 pm because the Finance Minister is coming in.

Ms Dolan: Thank you both for coming. The hard stop means that I will limit my questions, you will be glad to know.

It shocks me that we have the lowest premium rates for younger drivers. I represent Fermanagh and South Tyrone, which is incredibly rural and does not have good transport links. Young people in my constituency are being quoted £3,500 to insure a car, which is not possible, but it is a necessity.

A question that I have is about insurance companies pulling out of the North. It has been brought to my attention that some insurance companies are not taking on new taxi firms. Is that a thing, or is that maybe specific to Fermanagh?

Mr Shepherd: Taxi insurance, in general, is quite a niche product in the market. There are not many providers even on a UK-wide basis, because they pose particular risks and are more likely to have passengers in their car, which means more people to potentially get injured. It is not a particularly competitive market in the UK, but there are specialist providers. One of the advantages of having a wide range of providers is that you get some that look for a particular niche, such as young drivers, people with previous convictions, taxis, freight, heavy goods vehicles or whatever. We do have insurers that specialise in providing insurance for taxis. I do not have an assessment of whether the numbers have gone up or down in Northern Ireland in the past number of years, but we will take the feedback. I know that some of our members are still providing that insurance in Northern Ireland. If you have any issues with companies, we can pick that up and provide the information.

Ms Dolan: That is helpful. Thank you. My other question is about convictions. I know that drivers need to be punished, but it has been brought to my attention that the Driver and Vehicle Licensing Agency and the PSNI overwrite penalty points after three years, but insurance companies keep them for five years. Is that true, or is it a question for the regulator?

Mr Shepherd: I do not know. I will have to take that one away. Most of the material that I have seen has been asking whether a driver has had any penalty points in the past year. Insurers will take into account a wide range of risk factors, and previous claims are the most important of those factors. Despite all the algorithms that you might think are going on in insurance pricing and all the different factors that are taken into account, the best indicator that someone will have a future claim is if they had a claim in the past. That is still the biggest factor that drives up people's premiums.

That might be the result of points on your licence or it might not. It might just be the result of the fact that you have had a claim. That is a higher factor than driving history, but driving history is important as well. Clearly, having points on your licence could be an indicator to an insurer that you are not as safe a driver as someone without those points on their licence. So, it is a factor.

Ms Dolan: I will leave my questions there.

Mr Brett: Gentlemen, Alastair in particular, it is good to see you again. Your written evidence states:

Why do you not do that?

Mr Ross: That data is provided to us at quite a high level by the different insurance companies. The more specific you get, the more granular you get. It depends on those companies' different processes and procedures for processing information and drawing it out and then sending it over and sharing it with us. We also need to be conscious and aware of competition law. There is quite an important distinction between the quotes that you see on price comparison websites and the premiums that are actually being paid by consumers. If we go into the levels of detail, people might be able to extrapolate that out and use it for anti-competitive purposes with their own pricing. We need to be quite cautious about that. The other point about price comparison websites is that, as well as those being quotes, they do not take into account people who are renewing with their existing carriers. You can see levels of detail in the price comparison websites that are not reflective of the entirety of the market. I put that health warning in there as well.

Mr Brett: That leads onto the point that I was going to make. You have used quotes as evidence to stack up the claim that Northern Ireland is one of the cheapest regions, but claims are not reflective of the actual cost of premiums. Anyone can go on and get a quote. They then say that they want to continue with the policy and are asked more questions. They provide more detail and find that the premium is higher than the quote that had been given. Again, that does not take into account renewals with existing providers, which tend to be higher. How can you use data from quotes to state that Northern Ireland is cheaper when what we need to see is actual premiums paid to back that up with evidence?

Mr Shepherd: There are a couple of things. We are looking at the breakdown of premium by region, Phillip. I would like to be able to come in front of this Committee and have Northern Ireland-specific data. It would make my job a bit easier as well. We want to look at that and see what is possible, but, as Alastair said, we have to be careful that you cannot read into that some pricing indications that might incentivise competitors to act in a certain way. We need to be specifically careful of that because we are a trade association.

On the quotes, we are trying to be helpful to the Committee. In the absence of having our own data broken down, we have tried to source other comparable data. They are comparing quotes versus quotes, so the comparison is still valid when compared with other regions. I completely accept that that is not the premium that people pay, but, often, the quote will be higher, on average, than the actual premium that people pay. That is because they have rung up their insurer and potentially changed their terms and conditions, reduced their mileage or whatever it might be to try to reduce their premium from the quote that they originally got. You are right to say that it does not take into account renewals. It does not take into account broker-led business or direct business either.

Mr Brett: I have a final question. In October, the UK Government announced a task force on insurance prices across the UK. Have you been involved in that from a Northern Ireland perspective?

Mr Shepherd: From a UK-wide perspective, we have been involved in that. We sit on the stakeholder panel. There is a task force that is, essentially, as we understand it, Departments and the regulators — the FCA and the Competition and Markets Authority. They constituted the stakeholder panel of other interested groups, of which we are one. Our director general went to one meeting of that stakeholder panel last year with the task force. There were then, as you may have noticed, two changes in the Ministers who were leading the task force. The Chief Secretary to the Treasury and the Transport Minister both changed in Westminster, and we understand that that led to some delays in that task force progressing its work. It has now been reconvened, and we are expecting the task force to meet the stakeholder panel again, probably towards the end of this month.

Mr Ross: We met the current Minister of Finance and his predecessor, and they both discussed motor insurance premiums, in particular, in Northern Ireland. We are aware that the UK Government have convened a devolved nations session with ministerial representation from Northern Ireland, Scotland and Wales. However, we are now waiting for the UK Government to announce the next steps under the current Secretaries of State and Ministers respectively.

Mr Shepherd: I think that this inquiry is intended to feed into the broader financial inclusion strategy of the UK Government.

The Chairperson (Mr O'Toole): Yes.

Mr Shepherd: Although it is very focused on banking and retail banking, an insurance subcommittee has been established to look at what access to insurance issues might be a part of that financial inclusion strategy. Our director general has been asked to chair that subcommittee.

The Chairperson (Mr O'Toole): Those are two matters — the subcommittee that you talked about, Mark, but also the devolved nations task force that you just mentioned, Alastair.

Mr Ross: I do not know whether I said that it was a task force, but, within the task force initiative, there is engagement with the devolved Ministers.

The Chairperson (Mr O'Toole): We will need to follow up on both of those.

Mr Tennyson: Thank you, Alastair and Mark, for your evidence so far. I just want to understand the landscape, if you like, of this. What proportion of insurance customers draw down a successful claim?

Mr Shepherd: It will vary according to product. Are you talking about motor insurance?

Mr Tennyson: Take motor insurance just as an example.

Mr Shepherd: I think that it is a very small proportion, in the region of a single-figure percentage, on an annual basis.

Mr Tennyson: In your written evidence, a chart helpfully tracks the average settled claim versus the average premium. It looks almost like a direct relationship in that, as costs go up, premiums go up. However, given that there are significantly more paying customers than claimants, is that direct relationship really necessary?

Mr Shepherd: What we are trying to show to the Committee is that, in our view, what drove premium increases in 2023 was an increase in the average claims costs for insurers, and they need to reflect that in their rate increases otherwise it is very difficult for them to continue to survive in that market.

Mr Tennyson: The evidence so far has focused on those rising costs, and I think that everybody would concede that there have been rising costs. However, in one example, Admiral reported a 90% increase in its pre-tax profits for 2024, driven by an unexpected surge in UK motor insurance profits. Is that reflective of the picture across the industry, and is it the case, actually, that it is not just cost but profits that are driving up costs for our constituents?

Mr Shepherd: A number of statistics have been bandied about, in particular around insurance profits. We need to recognise that insurers do not necessarily operate and provide just one product. They also make profit through their investments, and we have seen a particular uptick in return on investments in 2024, which has been driving a lot of those profits. However, 2024 was a better year for motor insurers from an underwriting perspective. There is no doubt about that. That was driven largely by the fact that they were able to increase those premiums and rates to better reflect the claims costs. As we state in our evidence, however, as we get towards the end of 2024, we are seeing average motor insurance premiums fall back down. They have come down from the peak at the start of last year, and that, again, is reflecting the fact that insurers have been able to operate on a more efficient and equitable basis, if you like, comparing their premium with the claims costs and expenses that they have to pay out.

Mr Tennyson: I would gently suggest that the Admiral case was a specific example in which the analysis was that the profits were driven by motor insurance. I accept your argument that there are multiple products and investments, but I do not think that my constituents would argue that it was equitable when they were facing a 50% increase in their car insurance premium — maybe never had a claim — and were watching their insurers reporting bumper profits. Just how equitable some of those increases are is something for the industry to consider.

Mr Carroll: Apologies for missing your presentation, but I read your paper, obviously, and thanks for that.

I return to the point that insurance should not be for profit, it should be for the public good, and I question whether it is the latter. How do you respond to the perception amongst home insurers, in particular, that they are being overcharged? I agree with Jemma. If you talk to young people, they would be astounded to know that they are paying some of the cheapest rates for car insurance. They are being charged quite heavily, and, quite often, in areas of high deprivation, they are paying more, which is an unfair further charge on them. How do you respond to that suggestion?

Mr Shepherd: On the home insurance side, we have seen a couple of things. One is that the costs of repairs to a home that has been damaged have gone up significantly. That has been driven through into premiums in the past couple of years. Everything from inflation to energy costs to labour costs to the cost of paint or glass have all been increasing significantly. That cost is being borne by insurers when they are conducting those repairs. We are also seeing significantly more frequent and more severe weather events, and that has been driving up the frequency and the average cost of home insurance claims — homes that are damaged by storms or floods, essentially. Clearly, we are big supporters of action to tackle climate change and the frequency and severity of those weather events, because it is insurance companies and our customers that are bearing the brunt of that.

I cannot remember your second question.

Mr Carroll: Neither can I. [Laughter.]

I will move on anyway. Profitability was not a factor in your answer. I would add that, but I appreciate that.

This is my final question. Are you aware of people either struggling to get a quote for home insurance or being quoted significantly higher than those in neighbouring areas if they are described by the home insurer — the provider — as being in an area at risk of flooding even though DFI has declared that such an area is not at risk of flooding? There is an example in my constituency: St James. DFI is saying that it is not at risk of flooding. It might have been at risk 40 or 50 years ago, but people are struggling to get quotes, and, if they are getting quotes at all, they are being quoted double what they were quoted in previous years. That is maybe a wider problem than just that specific area. Have you come across that issue at all?

Mr Ross: There are a couple of aspects to that. One is obviously that DFI produces its flood maps. I do not think that insurers are permitted to use those for commercial purposes. As a householder, you could work out what your risk is according to the DFI maps, but an insurer could not use that for underwriting purposes, as I understand it. Insurers invest significant sums of money in buying in data from commercial providers. We were speaking recently with firms such as JBA Risk Management and Fathom. They provide flood-mapping data for insurers. That also tends to be a bit more granular in the level of detail that it goes into than some of the DFI maps. They may be on a much wider level — maybe a postcode level — whereas JBA and the other commercial mapping could go down to property level. I absolutely recognise what you say about the potential flood risk.

What we do have is the Flood Re scheme, which is an initiative that was brought forward by the UK Government in association with the industry. The industry pays for it. Mark can correct me if I am wrong, but I think that insurers pay about £135 million a year, essentially as a levy, to fund the Flood Re facility, and that provides a reinsurance. It is essentially insurance for insurers. If you live in an area of higher risk, you can go on to the Flood Re website, check which firms offer insurance under Flood Re and then go to them for a quote. They will pass the flood insurance element of that quote on to the Flood Re scheme, and that should result in a significant reduction in premiums. It covers Northern Ireland. The take-up rates in Northern Ireland are, perhaps, lagging a little bit behind those in GB, so anything that we and you can do to raise awareness of Flood Re as a facility would be helpful. It is not necessarily something that you have to ask for as a customer, but if you are buying directly or going through a broker, you should definitely ask the broker, "Do you know about the Flood Re scheme? Are you involved in that?". That should definitely make a difference, where possible.

Mr Carroll: Thank you.

The Chairperson (Mr O'Toole): OK. No other members have indicated that they wish to ask questions.

I have a couple of brief questions before we release you. You mentioned brokers and the broker market. Is it your view or are you telling us that one potential reason for higher premia here might be that there is more use of brokers here than in Britain?

Mr Shepherd: Anecdotally, our perception is that a customer in Northern Ireland is more likely to use an insurance broker — a high street broker — than customers in GB. Intuitively, that feels right, because, having grown up here, that is what my parents do. There is an extra cost to going through the broker, because there is an extra intermediary involved, if you like.

The Chairperson (Mr O'Toole): I should say that they are all reputable businesses. I was just asking the question.

Mr Ross: Absolutely. I think that you are probably seeing demographic differences. As Mark mentioned, people from his parents' generation might traditionally go through a broker. If you are in a particular risk area, such as being a young driver, you are probably better going through a broker, who can get some specialist insurers that may be able to provide the right cover. If you are in an area with a higher flood risk, the brokers are in a very good flood insurance directory scheme, which, again, can help people to get more affordable cover.

Just as in other parts of the UK, you see that younger consumers here use the direct channels or price comparison websites. I point you towards information in your pack. The Consumer Council for Northern Ireland's consumer insights survey shows that motor insurance is the product that people shop around for most in Northern Ireland. It is ahead of things such as mobile phones, fuel for your vehicle, utilities, loans and credit cards. Motor insurance is number 1, and home insurance is number 3. That indicates that people are shopping around, which is one of the ways to get the best choice, but they can do that through those different channels, including by using brokers.

The Chairperson (Mr O'Toole): I have a final question before I release you. Is it possible that there is a sharp differential within Northern Ireland? We appreciate that there are competitiveness reasons why you might not want to disaggregate data, but there is also a fairly clear consensus — as political representatives, we consistently get this feedback from our constituents — on high insurance premium costs. Those are people who are aware enough to have noticed it. Even the kind of person who allows their motor or home insurance to auto-renew is noticing it, and they are coming to us. It is not a kind of pure hypothesis, but is it possible that there are differentials within this region? For example, we know that we have high levels of rurality. I am not saying that this is the case, but might people who are closer to the border have increased insurance costs, or might that be factored in? You talked about flood risks. I am interested in whether you could provide any further analysis to the Committee that might allow us to reflect a little bit for the purpose of our evidence?

Mr Shepherd: There will be differences even within regions. There will be differences that go right down to the level of postcodes, streets or individual houses. There are different rating factors when it comes to you as an individual. We talked about claims history and other factors, such as your financial history, particularly if you have had a conviction or anything like that. That can all have an impact. There are risk factors that relate to the asset that you are insuring, be that your car or your home, such as you as an individual; where you are likely to be; or the risk factors that might be present because of where you are situated or where you are driving. Those are things like floods and storms, because there is a potentially higher risk of those in some areas compared with others. It might be the amount that you drive in urban areas compared with rural areas, for example. There is no doubt that there will be regional differences as well.

The Chairperson (Mr O'Toole): It would be helpful if you could provide the Committee with any further information on any specific local or regional factors, because it is a fairly consistent message that we get back. I include in that request information on whether being an elected representative has any bearing on increased premiums. I am sure that we want to know whether being politically exposed, as it is called, has an impact.

Mr Shepherd: Employment is another example of something that is used as a proxy.

The Chairperson (Mr O'Toole): It is about that kind of thing. There are multiple things that we want to understand for Northern Ireland, and we hear about that fairly consistently. No one has any further questions, so, on that, I thank Alastair Ross and Mark Shepherd very much.