Business Personal Finance

Tuesday 13 November 2018

Car insurance premiums set for double-digit hike

Prices shot up last year and are now set for similar increase

Rules which favour the wealthy are unlikely to change
Rules which favour the wealthy are unlikely to change
Charlie Weston

Charlie Weston

DRIVERS have been warned to expect double-digit hikes in insurance premiums this year.

Experts are blaming lawyers for inflating the cost of claims, which is causing premium hikes.

The price rises will come on top of new figures from the Central Statistics Office showing that car insurance costs shot up by close to 12pc in the year to December.

Higher insurance costs are countering sharp falls in petrol and diesel at the pumps.

The average price of a litre of petrol has fallen by nearly 11pc since December and now stands at 131.6 cent, AA Ireland said.

The sixth straight month of falling prices has also seen the price of diesel fall by 9.7pc to an average of 124.3 cent a litre.

But insurance experts have told motorists to expect premium hikes of up to 20pc this year.

Another 12pc rise in premiums this year would cost a family paying €800 for two cars close to an extra €100 on their annual premium. That would take the overall cost to almost €900.

Younger drivers are set to be hardest hit by the higher cost of getting cover.

Insurers are losing money on motor policies due to higher levels of road fatalities, more collision and injury claims, and the added expense of lawyers getting involved in injury cases, experts said.

The Irish Brokers Association's Brian McNelis said drivers should prepare for another round of sharp premium rises this year.

He said rises of between 8pc and 15pc were likely.

Mr McNelis said: "There is no doubt about it - motor rates have gone up, and will go up between 8pc and 15pc depending on the type of business."

And Conor Faughnan of AA Ireland said he would not be surprised if premiums go up by more than 8pc this year. He said the increase in traffic volumes on the roads was leading to more accidents, while there was a rise in the number and cost of claims.

"We also have a situation where claimants are drifting back to solicitors instead of going to the State's Injuries Board. That is very unwelcome."

The Injuries Board was set up to remove the need for those making claims to use lawyers, which were adding up to 50pc to the cost of claims.

But increasingly insurers are settling claims when contacted by lawyers, ahead of the claim being dealt with by the Injuries Board. Part of these settlements involves fees and costs for solicitors, which is inflating overall claims costs.

The Injuries Board was set up in 2004 and has saved €1bn in litigation costs, a spokesman said yesterday. That €1bn would have been added to insurance premiums.

Managing director of CoverInAClick.ie Jonathan Hehir said motor insurers had been losing money for five years. "Unfortunately for consumers 2015 will see car insurance premiums increase - by anything from 10pc to 20pc before the end of the year.

Insurers lost a collective €254m in 2013 on motor insurance. Two of the biggest players, RSA and FBD, have issued profits warnings in the past few months, and raised premium rates.

Statistics published by the gardai show a rise in the number of fatalities last year and more collisions.

The Injuries Board has called for a probe into the early settlement of claims by insurers. Head of the board Patricia Byron says undue haste to settle cases may lead to "disproportionate legal fees".

But Stuart Gilhooly of the council of the Law Society, the body that represents solicitors, said it was "lame" to blame lawyers for higher premiums.

"The Injuries Board has consistently released figures demonstrating the savings they have made over the last 10 years.

"In those circumstances, the frankly lame suggestion that lawyers can bear any responsibility for increased premiums has absolutely no basis in reality."

Irish Independent

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