Huge car insurance hikes 'not justified'
Published 15/09/2016 | 02:30
The State body that deals with insurance claims has told TDs and senators it sees no justification for the huge increases in motor premiums that car owners are experiencing.
Injuries Board chief executive Conor O'Brien said there had been no big increase in claims or awards to justify rises of 70pc in the average premium in the past three years.
The State's competition watchdog is currently probing suspected cartel activity in the insurance industry.
"In relation to claims, it's not entirely clear how they are contributing to this issue," Mr O'Brien told the Oireachtas Finance Committee inquiry into motor insurance costs.
"Our figures in recent years do not support the level of increase in claims and we cannot see how people justify the level of increases that we've seen."
The Injuries Board is the state body that assesses personal injuries claims. Cases can only go to court if awards made by the board are rejected by the claimants or the insurer, or the board decides it cannot deal with it. On whiplash claims, Injuries Board executive Maur-ice Priestley said there has been no increase in such claims.
Insurers say that 80pc of the claims they receive relate to whiplash injuries, with a suspicion that some are exaggerated.
Mr Priestley said that roughly 70pc to 80pc of the claims the Injuries Board receives relate to whiplash.
The average award from the board is €21,000, which has not changed for several years, politicians were told.
The Oireachtas committee was also told that insurers were hiking premiums to make up for losses.
Gary Dunne, of the Society of Actuaries, said insurers had charged too little in the past as they competed for market share. "Part of the recent premium increases reflects the need to restore pricing to a level that provides better security for claim payments," he said.
However, he added that higher levels of awards were playing a part in premium rises.
Mr Dunne said motor insurance rates fell 27pc between 2003 and the start of 2010. Since 2010, Quinn Insurance has gone into administration, RSA has incurred massive losses and Setanta collapsed.
There were also changes to the courts system that impact on insurers, he said, adding: "Another part of the increase in costs is a higher degree of uncertainty in awards, driven by court and other changes.
"In addition, experience has been worse than expected - more claims and higher costs."
Mr Dunne called on insurers to make available data on the private settlements they make to people who make claims. Seven out of 10 claims are settled outside the courts system and away from the Injuries Board.
"We believe evidence-based research is vital to underpin informed policy making," said Mr Dunne.
"We support minister Eoghan Murphy's call for greater transparency and we urge the Government to commission an annual analysis similar to that performed in other jurisdictions."
Such an analysis should cover industry and Injuries Board data as well as road safety statistics.