Yet another fine mess in motor insurance set to drive us nuts
Published 26/04/2015 | 02:30
THE nation's drivers are getting the run-around from insurers. The latest official figures indicate that the average premium has shot up by 14pc in the past 12 months.
This means insurers are seeking an additional €40 on premiums that cost around €300 last year.
And many drivers will attest to getting much higher quotes than this at renewal time.
Motor insurance is a big try-on. Even in good times, insurers attempt to boost their profits by whacking up premiums at renewal time.
In this cynical percentage game, they know a fair proportion of drivers will cough up the extra euro demanded.
But something different is happening now.
Over the last three years, insurers under-priced the cost of cover in a desperate bid to gain market share.
They were led on this questionable practice by RSA and 123.ie - its online offshoot.
We are all now paying the price.
Insurers that are losing money on motor insurance are now pushing up premiums in a desperate scramble to get back to profitability.
It means it is not just in banking that we are paying the price of dreadful and irresponsible decision-making by financial services companies. And poor regulation is not just a feature of the rapacious banking sector.
Just four years after Quinn Insurance was forced by the courts into appointing an administrator to run it, the same sort of under-pricing and under-reserving has done for RSA here.
The legacy of the Quinn Insurance mess is a 2pc levy on all non-life insurance policies to plug the monumental hole in the accounts.
The losses unveiled at RSA have meant its British parent company has now pumped almost €400m into its Irish arm since the unit was hit with an accounting scandal in 2013.
The parent group's latest injection into the Irish division means RSA has now provided almost four times the amount it initially coughed up to bolster the subsidiary when the accounting issue emerged less than two years ago, as my colleague John Mulligan revealed recently in the Irish Independent.
RSA said in 2013 that it had uncovered a €274m hole in the accounts of its Irish business.
But the company has to put even more money into its Irish unit since then.
The only saving grace here is that taxpayers did not have to fund the deficit.
But higher premiums across all insurers mean we are paying for it indirectly.
And drivers can't do much about this mess other than to make sure they challenge any higher renewal quote from their existing insurer and work hard at getting a better-value quote.
What a mess that drivers are paying on the double for poor business decisions and lax regulation.
It is enough to drive you around the bend.
Will we never learn?
Sunday Indo Business