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Brokers ‘must do more to cut the cost of motor insurance,’ insists reform group

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UK private-equity firm Livingbridge acquired a majority stake in Chill Insurance last year in a deal that is said to have valued it at up to €100m. Photo: Chill Insurance

UK private-equity firm Livingbridge acquired a majority stake in Chill Insurance last year in a deal that is said to have valued it at up to €100m. Photo: Chill Insurance

UK private-equity firm Livingbridge acquired a majority stake in Chill Insurance last year in a deal that is said to have valued it at up to €100m. Photo: Chill Insurance

Insurance brokers have been urged to do more to bring down motor cover costs.

It comes after details emerged of high levels of commission being paid to brokers by insurers for motor policies.

Last week the Central Bank said broker commissions last year represented 17pc of the combined value of motor premiums in Ireland. 

It found that the average motor premium is €622.

If brokers are getting 17pc in commission, it means up to €113 is going to brokers in commission for the average policy sold. And this year’s figures refer to third-party brokers only and not those that are owned by insurance companies that funnel all business to the parent company.

High commission levels are one of the reasons there has been more than 30 buy-outs of brokerages in this market in the last few years.

UK private-equity firm Livingbridge acquired a majority stake in Chill Insurance last year in a deal that is said to have valued it at up to €100m.

Director of the Alliance for Insurance Reform, Peter Boland called on brokers to help bring additional competition into the market, as a way of reducing the cost of cover.

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The Central Bank’s National Claims Information Database shows that insurers here made collective profits of €162m last year, a year when motoring was heavily restricted.

Operating profits were 12pc, which is near the “peak of profitability”, the Central Bank said. But premiums only fell by 7pc, with 4pc of this made up of refunds that some insurers paid after coming under pressure to do so.

Mr Boland said brokers also “fared exceptionally well on both motor and liability insurance over the course of the current crisis”.
He said this was clear from the National Claims Information Database reports and the rush of acquisitions..

“Many brokers have not covered themselves in glory during the pandemic, resolutely defending underwriters’ positions on business interruption claims in the face of all available evidence.”

Brokers Ireland, which represents 1,225 broker firms, was asked if policyholders were getting good value.

It said it found 17pc commissions figure “puzzling” and insisted a typical broker gets around 5pc commission and generally not more than 10pc.

The broker body said the definition of third-party intermediaries used by the Central Bank includes the likes AIB, Bank of Ireland and SuperValu Insurance.

It said due to the volume of insurance these sell they could be commanding higher commission rates than smaller brokers.

Brokers Ireland insisted its members strive to get the best value for their customers and are not resisting premium cuts to keep commissions high.

It said it was working with the Government to encourage more insurers into the market.

Around half of the value of motor premiums were sold through brokers last year.


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