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Friday 25 May 2018

Manners finally put on industry - to the relief of drivers

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Charlie Weston

Charlie Weston

It is amazing what an unannounced, early morning visit from European cartel-busters does to the mindset of insurance people.

Insurers deny it, of course, but it seems that the raids on insurance concerns here in July have pushed down the accelerator on motor premiums. And it is not before time.

Drivers have had a torrid time of it for three years now from a could-not-care-less insurance industry.

Insurers have effectively forced drivers to bail them out after they had started to record losses.

Blame for premium hikes of an average of 70pc over the last three years has been attributed to low investment returns, the high costs of injuries claims, changes to rules on reserves and the Setanta Insurance collapse.

What you will not hear about is the part that insurers themselves played in the crisis due to the fact that they under-priced insurance for too long and failed to put sufficient reserves in place. Now they are back making profits.

The fact that the average premium has dropped by 14pc means that insurers overdid the increases.

The raids by the EU's cartel busters are likely to have scared insurers, prompting them to ease up on motorists.

Those raids raise questions about the role of the Central Bank in protecting consumers here. In the past, it has told insurers to raise their premiums, while later claiming that it has no role in setting prices.

Officials from the EU's Competition Directorate are investigating the possibility that a cartel is operating within the Irish motor insurance industry.

It is worth noting that insurers are also getting a lot of what they want, through reforms being pushed through by the Government's working group on insurance reform. The reforms are needed because motorists are paying for additional layers of fraud, bureaucracy, inefficiency and waste in the insurance sector.

The latest fall in premiums recorded by the CSO means every driver getting a renewal quote from their insurer would be wise not to accept it now, until they check whether they can do better by taking their business to another insurer.

Insurance is one of those weird businesses where are a range of different prices are offered for the same service from different companies. But there can be little doubt that the EU cartel-buster raids have helped tamper the run-away premium rises and send them into reverse gear.

Irish Independent

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