Motor premiums may keep rising in the short term until new measures take effect
Published 07/09/2016 | 02:30
More people are back at work and earning again.
As the economy has recovered, the Government has been able to reduce taxes on salaries. Petrol is cheaper.
And yet the recent surge in car insurance premiums - as much as 40pc in the past 12 months alone - is undoing all of this for many people up and down the country.
People are furious, and they should be, because the jump in their premiums has nothing to do with their own behaviour on the roads or the condition of their cars.
Rocketing insurance prices have added a whole half a percent onto the Consumer Price Index. There is a very real risk to our domestic economy and our competitiveness.
Urgency is required. Clear and considered action must be taken to address the reasons behind the high increases in premiums without undermining the stability of the sector.
The Government cannot control the price of premiums. It can take a leading role in identifying those factors driving price increases, it can build consensus among the various stakeholders, and it will take action to reform the motor insurance landscape in the interest of consumers.
That is why Michael Noonan requested that I lead the work of a cross-departmental task force and immediately address the massive spike in premiums.
We are now working to agree priority actions by the end of next month. By year-end, the aim is to have an action plan in place to enable Government departments and offices to commence implementation.
Our goal on the task force is to identify those immediate actions that can tackle some of the causes behind rising prices. Longer-term structural changes will also be necessary to ensure any improvements made now will last, and costs do not spiral out of control again.
Some will recall that the Motor Insurance Advisory Board (MIAB) responded to a very similar situation in 2002. Yet we could be considered to be back where we started.
A hands-on approach is needed given the number of stakeholders involved and this is how we are proceeding. Sub-groups have been established and a busy schedule of work is planned.
The core areas to be examined include, but are not limited to: the effects of legal costs and litigation on insurance costs; the current claims compensation arrangements and the cost of claims; the impact of company failures; insurance data and information; the impact of accident rates; the impact of unlawful activity on the insurance sector; and other market issues.
Looking to other jurisdictions, it could well be that something radical is required. For instance, many commentators have raised the high prevalence of minor personal injury claims here in Ireland and suggested moving to a system of care rewards instead of cash.
But a word of caution: until new measures are agreed and implemented, motor insurance premiums may continue to rise. However, if political consensus can be found on proposed actions at an early stage, this may help to pre-empt any further significant escalation in premiums. Here the work of the Oireachtas Finance Committee is essential.
The Government is taking action. Our response will cover a number of areas to ensure that people are not being unfairly penalised with higher premiums. We will only be successful if we work together.