No need for further motor insurance premium rises in 2016 - broker
Further hikes in motor premiums by insurers are unnecessary, according to calculations by insurance broker Coverinaclick.ie.
Motor insurance premiums rocketed in 2015 - up by around 30pc in the past 12 months. Insurers have been trying to reverse losses after years of underpricing its motor policies and failing to put aside sufficient reserves to meet a rising level of claims. The sector has been hit with more frequent claims and higher court awards.
A review of insurance premiums - in particular motor insurance - is under way at the Department of Finance to question the hikes in detail.
Premium rises in 2015 were more than enough to match losses incurred by insurers, according to Coverinaclick.ie.
"Unless there's a further shock to the market, there shouldn't be any further increases so premiums should remain flat in 2016," said managing director Jonathan Hehir. "Private motor insurance business generated €896.2m in premiums for insurers in 2014. But as claim payouts and costs were greater than that, insurance companies made a loss of €119.8m, which is 13.4pc of premiums.
"So assuming nothing else changed, insurers needed to increase their premiums in 2015 by 13.4pc to bring themselves back to break-even. Maybe add in a few percentage points for cushioning and profit, and we're up to an increase of 25pc - which is roughly what we've seen.
"But as we enter 2016 we firmly believe that, unless there's a further shock to the market such as a higher number of crashes or increased personal injury awards, there shouldn't be any further increases so premiums should remain flat in 2016. The increases to date must be regarded as 'full and final' hikes."
He added that 2016 should see significant strides made in developments that could help to bring the cost of car insurance down for compliant drivers.
"We welcome the insurers' initiative to roll out a no-claims bonus cross-checking system which is presently being piloted and enables each insurer to check the authenticity of the paper no-claims bonuses being presented to them.
"We also understand that the number-plate recognition system presently being trialled by the gardai is proving effective in identifying those with fake insurance certificates displayed on their cars. These two initiatives are likely to reduce the overall cost of insurance, which is good news for compliant drivers."
Sunday Indo Business