'Cartel-busting' raids cited for dramatic insurance fall
Cartel-busters from the European Union have been credited with sending motor insurance costs into a sharp reverse.
New figures demonstrate a huge plunge of 14pc in the cost of cover - the biggest annual drop since the insurance crisis hit.
The cost of cover has been falling for a number of months now, but the latest drop is the most dramatic since the insurance crisis began three years ago.
The latest Central Statistics Office figures are for August, just a month after European Commission competition enforcers carried out dawn raids on insurers, brokers and Insurance Ireland.
Officials from the EU's Competitive Directorate are investigating the possibility that an insurance cartel is operating within the Irish motor insurance industry.
The data shows premiums were flat in August, but down 14.2pc for motor cover compared with the same time last year.
The latest fall in premiums means that someone paying €500 for cover last year is likely to renew at around €430.
However, motor insurance experts warned that motorists were still paying elevated premiums, and it will take a number of months before the easing off in premium-price pressures is reflected in renewal quotes.
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Premiums have risen by 70pc on average over the last three years - while a number of insurers in this market have returned to profitability.
President of the Law Society Stuart Gilhooly, a persistent critic of insurance firms, said: "That 14pc is a dramatic fall.
"I would not be surprised if it was not at all coincidental that premiums have fallen so fast just after the EU Competition Directorate's dawn raids here."
Insurers blame the high costs of injury claims and lawyers' costs for the three-year surge in premiums up to now.
But Mr Gilhooly said: "Such a dramatic fall in premiums in such a short period of time means the reasons given by insurance companies for previous increases don't stand up. The fall in premiums exposes a lot of what insurance companies are saying for the spin that it is."
Michael Kilcoyne of the Consumers' Association said the EU raids had frightened insurers into submission.
"Clearly the EU guys are doing their jobs and the raids are having an impact. Insurers can no longer get away with the hikes. The people from Europe should continue to keep an eye on them," he said.
Consumer groups have been calling for a major reduction in the cost of cover after insurers started reporting bumper profits this year.
AA Ireland's Conor Faughnan said many motorist are still not seeing their costs of premiums fall.
"The battle is not won yet. Motorists are still paying too much for insurance. We need to push through reforms that the AAI and others have identified."
The industry is benefiting from a Government task force that is introducing reforms that are set to cut their costs.
Insurance Ireland said it believes there is an urgent need to implement fundamental and sustainable reform of the cost of claims.