Drive a better bargain and ensure you don't fall for the dual-pricing trick
The cost of insuring the average car has jumped by 42pc in the past decade even as the cost of settling claims is down. This means motorists need to seek out better value, writes Charlie Weston
MOTOR insurance is one of the most frag- mented products out there when it comes to pricing. This means quotes can vary wildly from person to person, and insurer to insurer.
Then there is dual pricing.
This refers to the practice of offering new customers better rates than those renewing their policies, who may end up paying a "loyalty premium" that penalises them for not shopping around.
This sees insurers use actuaries, algorithms and a host of other mechanisms to determine pricing. Figuring out insurer's pricing systems is nigh on impossible.
Some insurers favour older drivers, some favour couples, some diesel, some petrol, while others specialise in higher risk. Another huge concern for drivers has been the recent findings of the Central Bank that motor insurers have been pushing up premiums despite a fall-off in the cost for them in settling claims.
Premiums increased by 42pc in the decade up to 2018, a time when the average cost of settling claims was down 2.5pc. This has led to a situation where motor insurers made healthy profit margins of 9pc in 2018.
All of this means it is imperative that people don't simply accept the renewal price given by their current insurer. The odds are you will get ripped-off if you do.
Irish consumers are more inclined to switch motor insurance than most other types of financial services.
But many do not switch and are operating under the mistaken belief that they cannot challenge the renewal quote they have been sent by their insurers.
The reality is that renewal quotes are often a try-on. Dual-pricing means that insurers will attempt to push higher premiums on those they calculate are least likely to challenge them.
What should help drivers is that new regulations came into force in November.
These require insurers to state last year's price in addition to this year's price on the renewal notice.
This should prove to be an enormous help to consumers as it will allow them to compare and to contrast the cost of their insurance, according to the managing director of InsureMyCars.ie, Jonathan Hehir.
"But there may be unintended consequences of this new legislation, which is being put in place to create more transparency around insurance quotes," Mr Hehir warned.
"This is because if a motorist does see a reduction in cost, no matter how small when compared with last year's premium, they may automatically assume that this is the best deal, when in reality there may be a much greater saving to be made with another insurer."
Mr Hehir said that motorists need to be mindful that showing loyalty to a specific insurer won't necessarily equate to a reduction in your premium or in securing the best deal.
Factors that have the biggest influence on the quotes you get are: (a) the number of years you have been claim-free and the type of licence you have, and (b) the type and age of the vehicle.
So if you have recently passed your test, or have accumulated five years NCB (no claims bonus), or want to add or remove a named driver, or plan to change your car, these are all good reasons to seek out a better deal.
If you and your spouse have your own cars, adding each other as named drivers on your policies will discount premiums on both cars.
Other tips worth considering include keeping your car parked on a driveway or in a garage if you have one, and fitting an alarm. Using the same provider for your house insurance can help, too.
How to switch... Car insurance
STEP 1 Get a quote online from a broker like CoverinaClick.ie or McCarthy Insurance Group, which provide quotes from a range of firms. Alternatively, contact a broker you know. You could get quotes directly from insurers but this could take some time. Also, given that the amount of detail you are asked to input for a quote can vary a lot and thereby affect the final price, you may save yourself a bit of time by picking up the phone to insurers instead of obtaining online quotes.
STEP 2 Contact your current firm. See if they can match your best quote. If not, then it could be time to switch.
STEP 3 Switch. To switch you will need to complete an online or offline application form, and send on a copy of your driving licence and existing no claims bonus (NCB) letter, which you should get from your existing insurer, and your payment details.