Charlie Weston: How the days of rip-off motor insurance rates could be coming to an end
Published 14/09/2016 | 02:30
The move by the State's competition watchdog to probe pricing in the insurance industry is set to send shivers down the spines of the people who run firms in the sector.
But it will have been cheered by drivers.
There are now signs that, at last, some action is being taken to clamp down on what is outrageous price hiking by insurers.
Poorly performing, under-reserving and badly managed insurance companies have turned to the nation's two million drivers to effectively bail them out in the last two years.
Official figures show the average premium is up by close to 70pc in the last three years. Many drivers have been hit with even larger rises, even though they have clean licences, no claims and good cars.
Now the Competition and Consumer Protection Commission is to probe what it calls price signalling in the market.
This is where the various players tell the media they are going to raise prices by Xpc next year, seen as a signal to their 'competitors' to do the same.
It is considered cartel-like activity, and is illegal.
A cartel is a conspiracy against consumers to keep prices artificially high.
Insurers have been quick to say they have not done anything illegal.
No doubt they will also point out that the Central Bank has been encouraging them to raise their prices to build up their reserves.
There are many reasons given by insurers for the huge premium hikes. They blame suspicious and fraudulent claims and the prevalence of hard-to- disprove whiplash.
But it is also a fact that they are losing money on investments, settle claims too early, have under-priced and under-reserved in the past and are poorly managed.
Now they stand accused of acting like a cartel.
Making it hot for them also is the fact that the Oireachtas Finance Committee is holding hearings on why premiums are rising so sharply.
And Minister of State Eoghan Murphy, who heads up a Government working group in insurance costs, has promised to introduce measures to halt the spiral of rises. These include a national claims register and changes to make the lawyer-free Injuries Board more effective.
All of these developments should help to ease the plight of drivers, as insurers are now going to find it difficult to keep rising prices by double-digit percentages.
The days of rip-off insurance should be coming to an end.