Drivers must make a stand and refuse to bail out greedy motor insurers
Published 02/07/2016 | 00:00
Motor insurers are waging a war against the country's drivers and we need to defend ourselves. Their mismanagement and incompetence has led to a surge in the cost of premiums.
Average premiums rates are up 60pc in the last two years alone. That means a premium that was €500 two years ago is now €800 - a truly astounding increase.
Motor insurance is mandatory for the State's two million drivers. Such enormous increases are a raid on the pockets of the nation's drivers, for sure. But it amounts to something much more sinister - it is nothing short of a back-door bailout from consumers for the insurance industry.
Staff in insurance companies have also paid with their jobs, with huge lay-offs at the likes of Liberty, RSA and Setanta.
After rescuing banks to the tune of €64bn, Irish people again find themselves coming to the aid of financial services firms that were recklessly managed. Insurers have notched up huge losses, shed jobs, threatened the viability of businesses with huge premiums spikes, and then have the gall to send the bill to someone else.
What is happening is nothing short of a scandal. Insurance companies have stood back and let it happen, the regulators in the Central Bank were again asleep at the wheel, and the Government does not understand that there is an urgent need for it to act. All the while we have yet to see any large scale, and necessary, resignations at the top of insurance companies.
The unjustified attack that the insurers have launched on blameless drivers deserves a far greater response than the witless one we have witnessed from the authorities up to now.
Yet again, those with means to do something - the Department of Finance, the Central Bank and the Competition and Consumer Protection Commission - have stood back and allowed finance companies to do their damnedest.
Insurers have piled on the pressure on policyholders despite the fact that the total value of claims that insurers have to pay out has fallen by a third in the past few years.
Insurers constantly hark on about claims levels dictating premiums levels. But the amount paid out in claims in 2014 was 36pc less than in 2011.
And last year saw the lowest number of road deaths since 2012. Admittedly, there are more road deaths so far this year, but the insurance premiums been rising for three years now. The insurers need to be honest to us about what is really going on.
Insurers got involved in a crazy and senseless price war to win market share. They lost this war and drivers are being forced to foot the bill.
And insurers have been found to be under-reserving.
The other issue is the level of pay-out insurers are making in settlements outside the Injuries Board and the courts. Two out of three injury claims are settled outside the courts and the Injuries Board. The suspicion here is that many of these out-of-court settlements are nothing more than "go-away money".
All of this is why I will be speaking at a rally of drivers today in Dublin, at 2pm in Merrion Square. It is time drivers stood up for themselves and sent a clear message that they object to being used to bail out another failure in financial services in this country.