Sunday 22 April 2018

Government accused of not doing enough to reduce motor insurance premiums

David Fitzgerald, chief executive of the Mibi, said claims fraud causes a range of problems for Irish motorists, such as increasing the cost of insurance policies and making Irish roads more dangerous. Stock image
David Fitzgerald, chief executive of the Mibi, said claims fraud causes a range of problems for Irish motorists, such as increasing the cost of insurance policies and making Irish roads more dangerous. Stock image
Charlie Weston

Charlie Weston

THE Government has been accused of not doing enough to ensure motor premiums are reduced.

A hard-hitting new report from AA Ireland accuses ministers of missing an opportunity to reform the sector.

Motorists are now in a worse position than the start of the motor insurance crisis, AA Ireland chief executive Brendan Nevin said.

The motoring body said Government attention had wavered and reforms have stalled.

Surging premium rates were being treated as a crisis by government two years ago but necessary changes are not now being pushed through.

An absence of proper reform and new legislation has resulted in little change for the average motorist. Instead, the Government was now focused on issues like housing and Brexit.

Mr Nevin said: “Sky-high premiums are the new normal. People were shocked by this two or three years ago. The shock has worn off but the price increases have not.”

He accused the Government of treating the issue as yesterday’s problem because in recent months the Central Statistics Office has reported a slight drop in premiums.

This comes after average rises of 70pc recorded by the CSO over a three-year period.

Mr Nevin said the average premium was €450 in 2014 and is now around €750.

AA Ireland has been lobbying the Government on five key reforms it wants implemented to bring premium rates down.

The Government set up a Cost of Insurance Working Group that was initially headed up by then junior minister, and now Cabinet Minister, Eoghan Murphy.

Junior Finance Minister Michael D’Arcy is now chairing the working group.

Mr Nevin said: “Given that the crisis is still unresolved we now need to see leadership from the working group and the top level of government to finally implement necessary changes which would greatly benefit the average motorist.

“Without this proper leadership and action we will still be discussing many of these issues in two years’ time.”

AA director of consumer affairs Conor Faughnan said legal costs of claims were a major issue.

He said a Department of Finance report found legal costs can add up to 40pc to the cost of a court award.

“The lawyers are absolutely hoovering money out of the system. If the system worked properly they would not be involved,” he said.

He said there was no incentive for large insurance companies to reform the insurance market, as they are making money, and have the customer information that ensures new entrants find it difficult to enter this market.

“The big guys can thrive in a messy landscape because they have the information on the customers and on fraud, and the punter picks up the tab,” he said.

AA wants an independent body to put together a data hub to share information on motor insurance applicants and fraudulent claims.

And data protection laws should be changed to allow insurers share information on fraudsters, something they are prevented from doing at the moment.

The legislation governing the Injuries Board should be strengthened to stop so many personal injury claims going to court.

The motoring body also wants Garda Traffic Corps numbers increased.

And insurers should be forced to publish open information on the cost of claims, something the industry has been accused of hiding.

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