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Friday 29 August 2014

Insurance companies warned not to hike premiums

Charlie Weston Personal Finance Editor

Published 25/02/2014 | 02:30

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The cost of insurance can mount up. Photo: Getty Images.
The cost of insurance continues to rise

INSURANCE companies have been warned that there is "no justification" in hiking premiums this year despite a rise in the value of compensation claims made against them.

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There was an increase in the number of people getting compensation awards after suffering injuries in motor and other accidents, new figures show.

Almost a quarter of a billion euro was paid out last year.

But insurers were told not to push up premiums on household and motor policies despite a larger amount of awards being made last year by the Injuries Board, the state body that handles personal injuries claims.

Head of the Injuries Board Patricia Byron said there was no increase in the number of accidents last year, despite a rise in the value of the awards.

She said the existence of the Injuries Board meant the cost for insurance companies of processing personal injuries claims was at historically low levels.

Before the board was set up insurers were dragged through the courts, which added huge costs to processing.

Ms Byron said insurers needed to remember this before hiking premiums.

JUSTIFICATION

The largest insurer in the market, RSA which owns 123.ie, admitted recently that it hiked motor premiums by 13pc.

The company was bailed out by its British parent when it failed to put enough money aside to cover claims.

And the recent storms have prompted fears of rises of at least 10pc in household insurance premiums as a huge volume of claims are expected.

But Ms Byron said there could be no justification for rises in motor and household insurance premiums.

"As regards our outlook for 2014, we are seeing no evidence of increased accident numbers but we do expect to see a continuation of the trend whereby an increasing proportion of claims are processed by the board and this should mitigate against any hikes in insurance premiums," said Ms Byron.

However, the board does not have any powers to stop companies from hiking premiums.

A total of €243.5m was paid out in awards, a rise of almost 12pc on the total value of awards made in 2012, the Injuries Board said. There was a rise of more than 8pc in the number of motor claims received by the board last year.

By law, personal injury claims – with some minor exclusions – must come to the Injuries Board for assessment regardless of whether the claimant has legal representation or not. The average value of an award last year was €22,847.

Irish Independent

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