A new motor insurance levy shows again that consumers always get it in the neck
A new 2pc levy will apply on all motor insurance policies from December 1 as a result of the Insurance (amendment) Act 2018 that was signed into law in September.
It will affect all motor insurance, personal, fleet and commercial and will be used to fund a 'motor insurers insolvency compensation fund' (MIICF).
This goes on top of existing levies. The joke in Ireland is that we have all this appearance of consumer protection and yet the same people who make all the rules that are meant to protect us are the very ones who pass the legislation that helps to lead to financial death by a thousand cuts.
The change allows for retrospective compensation of 100pc of third-party claims in respect of Setanta and Enterprise that are currently under liquidation, which were outside the scope of a review of the industry in 2016.
What does that mean? It means that all motor insurance consumers are partially on the hook for companies that couldn't do their job and the only solution is another back-door bailout of sorts.
The justification was that there were varying amounts paid out if you were due a claim by getting hit by an uninsured driver or where the insurance company went insolvent, but this doesn't address the key concern that we already pay so much for insurance and now that price will go up even further.
If you ever want to get annoyed, look at a new car then calculate the Vehicle Registration Tax (VRT), then consider your road tax, fuel costs (most of which is tax) and you quickly find that transportation is a giant tax machine.
There is also the apartheid that exists on car tax where a person driving an older car can pay huge amounts of car tax even though they drive only a small amount and a person driving a brand-new BMW all day 20,000 kilometres a year pays far less.
This takes the principle of 'polluter pays' and turns it on its head. Car tax is mostly collected online and yet we still have lots of motor tax offices all over the country. Dublin, with the majority of the population, has one. Donegal has seven.
We should scrap motor tax, scrap the crappy administration and pointless arrests when people don't pay it, stop the never-ending paperwork and bureaucracy and just put a tax on the fuel you consume. That would be fairest and ensures the polluter pays.
That won't happen though, because sadly, it makes sense - and anything that makes sense doesn't ever see the light of day.
- @karldeeter is the compliance manager at mortgagebrokers.ie
Sunday Indo Business