Another year of rising insurance costs for drivers amid high claims
Published 05/08/2015 | 02:30
Drivers will see insurance premiums continue to rise for at least another year, amid high numbers of claims being made.
Premiums have now jumped by 20pc compared with where they were a year ago and are due to keep going up, according to Conor Faughnan of AA Ireland.
The higher cost means that a car that was insured for €500 last year now costs €600.
And a leading motor insurance company has warned that it is getting more claims from drivers, which is set to put further pressure on premiums.
Axa said there had been a rise in the frequency of claims from drivers in Ireland and therefore of the overall number of claims it was getting from drivers.
Official figures for April show that premium rates have shot up by 16pc in the past year.
But AA Ireland, which is also an insurance broker, said its own calculations were that rates were up by 20pc.
A spokesman for the Injuries Board, the State body that assess claims, confirmed that it was seeing more claims.
"We are seeing single-digit increases across the range of claims we have received to date this year - probably due to increased economic activity - more people at work, more vehicles on the roads etc."
But the Injuries Board spokesman said increased economic activity should also mean an increase in the numbers of policies sold - something that should offset the higher number of claims.
However, insurers are continuing to make losses on motor policies.
Last week, the only indigenously owned insurer, FBD, saw its share price crash after its chief executive suddenly resigned.
FBD Holdings announced that Andrew Langford had informed the board of his decision to step down.
He will be replaced on an interim basis by group finance director Fiona Muldoon, formerly of the Central Bank.
Liberty Insurance and RSA are both laying off workers, with motor insurance losses the main reasons for the retrenchment.
Mr Faughnan of AA Ireland said insurers were also reporting that motoring claims had become more expensive to settle and insurance firms were getting more claims.
He said an increase to €60,000 in the value of claims that can be made through the Circuit Court was prompting more people to reject settlements from the Injuries Board and take a case to court.
"The change in the value of personal injuries cases that can be made in the Circuit Court has incentivised people to reach for the lawyers and reach for the courts," said Mr Faughnan.
The Injuries Board was set up to avoid people using lawyers and going to court.
It does not award costs to lawyers, but claimants are free to reject an Injuries Board settlement and then choose to take a court case.
Mr Faughnan said the insurers were facing pressure from the Central Bank to bulk up their reserves to meet more claims.
"This is one of the worst years for motor premiums. We calculate that premiums are up 20pc year on year. And there is no sign of it getting better for at least the next year," he added.