Friday 26 April 2019

It pays to switch - but also to know who your provider is

Motor insurance premiums have fallen so make sure you get the best deal available. Stock image
Motor insurance premiums have fallen so make sure you get the best deal available. Stock image

Irish consumers are more inclined to switch motor insurance than most other types of financial services, but a recent study has suggested that switching activity is declining, and also that many are hazy about who their provider is.

Amid the recent collapse of another foreign motor insurer that traded in Ireland under what is called a 'freedom of services' basis, a study by the Central Bank highlights the need to be clearer about who your insurer is and whether or not they are regulated here - whether you are switching or not.

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The study, published last November, showed that just 42pc of us switched motor insurance providers, but also revealed that 16pc of respondents could not name their insurer, and of the 76pc who could, a quarter of them cited the name of the broker who sold them the policy rather than the actual insurer.

The research comes after the high-profile failure of Maltese-based Setanta Insurance firm in 2014, and its publication coincided with the collapse of Qudos, a Danish insurer that, like Setanta, traded here on a freedom of services basis and sold around 50,000 policies in Ireland through brokers.

There was also the collapse in 2016 of Enterprise Insurances, a firm registered in Gibraltar.

So aside from the 1,500 or so claims involving Qudos that are reportedly in limbo as a result of its failure, the situation with the Danish insurer has again raised fears that Irish insurance customers will be hit with the cost of unpaid claims via levies - as seen with the collapses of Setanta Insurance and Quinn Insurance.

When it came to where their insurer was located, less than half (49pc) of the respondents to the Central Bank study said it mattered to them, with 45pc of these saying that if the insurer was located outside the State, it might change their decision. Younger consumers were more likely to consider using foreign insurers' products than older ones.

So if you are not sure who your underwriter is and whether or not they are regulated by the Central Bank, Cathie Shannon, director of general insurance at Brokers Ireland, recommends contacting your broker.

"The first port of call for motorists with queries in relation to motor insurance should be their insurance broker who will be in a position to provide best advice on an appropriate policy, outlining the range of options available and addressing any queries the motorist might have.

"Brokers Ireland urges the Central Bank, which regulates this area, to develop better guidelines to govern insurance undertakings operating in Ireland on a freedom of services basis." A spokeswoman for the Central Bank says it has encouraged brokers to make clear to customers the identity of their insurer and where it is located at the point of sale.

Tough deal

According to the CSO, motor insurance premiums have fallen by over 7pc over the past 12 months. This is, of course, good news and the trend should continue given that motorists endured sharp rises in premiums over the three-year period up to 2018.

However, younger drivers are still getting a tough deal thanks to limited competition in the first-time driver market, according to Jonathan Hehir of online insurance broker Coverinaclick.ie.

"Young drivers are vulnerable when it comes to motor insurance as a lack of knowledge, experience and a limited budget are all combining to make insurance a very expensive business for them."

This means that switching is still essential to find the best value. "By going direct to only one insurer you are limiting the number of options open to you, and therefore your chances of getting the best value around," said Hehir.

As well as age, the other 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 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... motor insurance

STEP 1 Get a quote online from a broker like Chill.ie, Quoteme,ie or CoverinaClick.ie, 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'll 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.

Potential savings: €1,300

Total time: 30 minutes

Irish Independent

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