Car insurance 'to rise 38pc next year'
Car insurance companies are clawing back huge profits with massive premium increases and unless the government takes action drivers face hikes of 38pc next year, an expert has warned.
Economist Jim Power said there is "definitely a rebuilding of profitability" by insurance companies, and he forecast further increases of between 20pc and 38pc. Mr Power said that between January 2005 and mid-2008 there was a 25pc decline in the cost of insurance as, he claimed, companies drove down quotes to gain market share.
He told the Irish Independent: "We are seeing the flip side of that now. Insurance costs fell, which suggests business was done that was pretty unprofitable. Now they are recouping that."
Since June 2013, insurance costs have increased by 71.3pc on average - but some have shot up by many times that.
"We could easily be looking at a 38pc increase again next year. It will be at least 20pc," Mr Power said.
He was speaking at a SIMI review of the motor industry. SIMI president Alan Greene called for a body to be set up along the lines of the Motor Insurance Advisory board that led to reductions in the late 1990s.