Motor cover costs up by a third and set to keep rising
Published 15/01/2016 | 02:30
Motor insurance premiums shot up by almost a third last year, and are predicted to continue rising.
The average premium increased by 31pc in the year to December, according to inflation figures from the Central Statistics Office (CSO).
Finance Minister Michael Noonan responded to premium levels by saying his department would carry out a review of the insurance sector.
This would be completed within months, he added.
But he rejected calls by Fianna Fáil's Michael McGrath to re-establish the Motor Insurance Advisory Board, a task force that is credited with coming up with recommendations that led to a reduction in motor insurance premiums when they were implemented.
Overall prices were up only 0.1pc since last year as petrol, diesel and alcohol prices plummeted. Rents were the other big riser, increasing by 9.6pc in the past year for those who are tenants of private landlords.
Motor insurance premiums showed the biggest rise, and meant that a family with two cars is paying an extra €300 a year in premiums.
The increases are set to continue, according to Conor Faughnan, the consumer affairs director of AA Ireland.
"The cost of motor insurance is still going up sharply and, unfortunately, that is set to continue," he said.
Fraudulent activity, high legal and claims costs, poorly resourced regulation, low levels of enforcement and a lack of industry transparency have cost motorists dearly, says the AA.
The industry is making losses after getting involved in under-pricing motor policies and failing to put aside sufficient reserves to meet claims. It has also been hit with more frequent claims and higher court awards.
The huge hike in premiums comes after the effectiveness of the Central Bank in regulating insurers was questioned by ratings agency Standards & Poor's, which said motor insurers would need to raise premiums again this year if they are to return to profitability.
It emerged last week that the Central Bank had told insurers to raise premiums because they were not charging enough to cover claims costs and expenses.
Figures from Insurance Ireland show firms here collectively made underwriting losses of €241m in 2014. Further losses were incurred in 2015, though the figures have not yet been made public.