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Saturday 27 May 2017

Motor insurers accused of 'hardening their attitude' towards drivers rather than easing up on premiums

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Charlie Weston Personal Finance Editor

Insurance companies have been accused of failing to co-operate with Government attempts to bring in measures to slow down the rapid rise in motor premiums.

Chairman of the Oireachtas Finance and Public Expenditure Committee John McGuinness this morning claimed that rather than easing up on drivers, insurers have “hardened their attitude”.

He also criticised the regulation of the sector by the Central Bank.

Mr McGuinness said drivers want action to cut the cost of premiums now.

The Government has produced a report with 71 action points for easing pressure on premiums.

And the Oireachtas Committee has also come up with a range of proposals to help reverse the string of rises in the cost of cover.

The cost of motor premiums has been rising for more than two years, with hikes of up to 40pc on an annual basis last summer.

Many drivers are being hit with much higher hikes.

Last September the State’s competition watchdog said it was to probe suspected breaches of competition law by insurers.

The Competition and Consumer Protection Commission (CCPC) said it suspected that motor insurers were signalling price increases to each other before raising premiums.

Read more: Motorists here at risk from failing foreign car insurers

This is seen as cartel-like activity - where players in a market who are supposed to be competing against each other instead act to regulate prices.

Despite the huge focus on insurance costs, chairman of the Oireachtas Committee accused insurers of failing to co-operate with official efforts to tackle the surge in premiums.

“I have not seen any change in the attitude of insurers. The attitude from companies, I would say, has hardened. It is clear consumers are being ripped off,” he told the committee, which was discussing motor insurance.

Mr McGuinness also said the Central Bank was not doing enough to safeguard consumers and was falling short on its consumer protection role.

But Junior Minister Eoghan Murphy, who is spearheading a Government taskforce on insurance reform, told the committee he feels insurers are co-operating with the attempts by the Government and the Oirteachtas Committee to bring in measures to bring the cost of premiums down.

However, he said he has had to have “robust discussions” with the insurers’ representative body, Insurance Ireland.

“But there is a change in their attitude and they are co-operating with us in a very positive manner,” Mr Murphy told the committee hearing.

He said that he had always made clear that there could be no immediate fall in the cost of motor cover.

“People are looking for a 50pc reduction in premiums, but it is not going to happen,” he added.

He said it would take time for the 71 actions in the Government’s 'Cost of Insurance Working Group Report' to effect the cost of premiums.

It was difficult to put a timeline on when the measures would influence premiums cost, he said.

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