Fraud and Quinn collapse cost drivers €100 a year
Published 03/01/2016 | 02:30
An astonishing €100 out of every Irish motorist's annual car insurance premium goes towards paying for fraud and the collapse of Quinn Insurance, a new analysis has shown.
And drivers will be paying for the collapse of the insurer for another 13 years even though they have already paid out a massive €236m.
The impact of common fraud on car insurance premiums is also rising.
Motorists due to renew their car insurance this month will be paying an average of €50 extra because of the activities of fraudsters on our roads, according to the Automobile Association (AA).
Four years ago, a 2pc levy on all non-life insurance premiums was introduced after the demise of Quinn Insurance.
And it will be at least 2029 before the full cost of the collapse is recovered. That's also adding €50 a year to the cost of car insurance for every motorist in Ireland.
The money is paid into the Insurance Compensation Fund and another €900m will be taken from non-life insurance premiums over the next decade and a half.
An AA survey of 5,000 motorists shows that one in three Irish motorists has seen the cost of their insurance rise by up to 50pc this year.
The association says the price hikes are leading to more drivers opting for reduced levels of insurance cover in an attempt to manage costs.
A further three in ten are forking out up to an extra 20pc this year, while around one in four policyholders saw no change in the cost of their premiums. Just 5pc witnessed a cost reduction.
"After a long period of cost stability, average prices have risen by almost 40pc since January 2014," says AA Chief Executive Officer Brendan Nevin.
Fraud, high legal and claims costs, poorly resourced regulation and low levels of enforcement have cost motorists dearly, according to Mr Nevin.
More than one in four motorists say they were forced to purchase lesser cover and risk facing heavier financial consequences from a potential accident. "Fraud continues to be a major problem - from criminal staging of "accidents" to fraudulent production of bogus "no-claims certificates" by drivers changing insurers, says Conor Faughnan of the AA.
The association, which acts as an insurance intermediary,
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receives between five and seven fake no-claims discount forms every week.
"What is really needed is a central data hub where insurers could access information. That would go a long way towards stamping out fraud. The paper system is simply not working," he says.
Unlike the UK, the Republic of Ireland does not have an integrated information database.
British insurers share information on clients so fraud can be quickly identified.
The AA also wants an end to paper windscreen insurance discs.
"Any child with a colour printer can knock up a fake insurance disc which would pass the garda torchlight test when a driver is stopped at the roadside at night," he says.
Another major problem is where a driver pays the first monthly instalment of a car insurance premium and then simply stops paying.
"That means that the driver has an authentic disc on their windscreen for the vehicle showing that it is insured but their cover has lapsed," Mr Faughnan told the Sunday Independent.
Enforcement is another major problem because of garda cutbacks.
Since 2009, the level of resources has fallen. In 2009 there were 1,200 Traffic Corps gardai.
Four years later the number was just 800.