Charlie Weston: 'Nine ways to fight back against high car insurance costs'
Expert advice on how you can save time and money as a number of investigations into the sector continue apace
The number of different probes into the insurance sector in this country are beginning to stack up. The latest is a study to be conducted by the Central Bank into what is called dual-pricing of home and motor insurance.
Dual-pricing is the use of big data by insurers to pick out clients who are unlikely to challenge renewal quotes, with these often being vulnerable customers.
The Irish Independent has been highlighting the corrosive impact dual-pricing has on loyal consumers. The Central Bank had been stonewalling on calls for it to say if it is even aware of the use of big data by insurers to cherry-pick vulnerable customers for higher prices.
But it is understood regulators in the bank now believe dual-pricing poses a risk to consumers. This is because those who do not shop around are negatively affected. A study is to be carried out to assess the scale and impact of the practice. It is due to be completed by year's end.
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On the back of this, action may be taken to clamp down on dual-pricing.
It comes as an investigation into price signalling by insurers is being carried out by the Competition and Consumer Protection Commission. That has been going for three years.
It comes on top of the European Commission's decision to open a formal anti-trust investigation into insurers here. It is investigating if the representative body, Insurance Ireland, is denying some insurers assess to a database it controls - and whether this means there is a cartel operating.
Commissioner Margrethe Vestager said the investigation is to check if Insurance Ireland's Insurance Link data pooling system restricts competition. It follows a series of raids on motor insurance providers in summer 2017.
The industry could be facing multi-million euro fines if it is found they are operating a cartel. It could also result in lower premiums for motorists, according to a legal expert.
Any adverse findings are likely to result in it being opened up to competition from foreign insurers, competition lawyer Ronan Dunne says. He is a partner at Philip Lee solicitors.
Taoiseach Leo Varadkar said if a cartel is found, breaking it up would lead to premiums falling.
Official figures tell us that motor insurance costs have fallen in the last while but they still remain 50pc above 2008 levels. And despite the recent falls, drivers are continuing to get hugely inflated renewal quotes.
So while we await the outcome of the probes, the onus is still on us to ensure we get the best deal possible. Many don't realise they can often get a better deal after the first year if they scour the market.
Here are the best ways to fight against your car's insurance costs:
■ Drive a smaller car: Downsizing will have a positive impact on your premium. Age and engine size affect the cost. But the effects are not always easy to predict or understand, according to Jonathan Hehir of InsureMyCars.ie. He says an insurer might attach a lower risk rating to a 2007 1.1-litre Ford Fiesta than to a 1.1-litre Peugeot of similar vintage. Despite being similar, insurers apply a wide range of algorithms and variables when assessing risk rating and profile, he says.
Even slight differences in occupation, when associated with a particular car model, can add to, or subtract from, a quote, and create apparently illogical differences in premiums. Before buying, contact insurers with details of the models you are considering, he advises.
■ Switch: If you are claims-free, it makes sense to regularly switch insurer. Compare rates. It is worthwhile using a broker. It won't cost you any more than going directly to the insurer; the broker is paid by the company. You may be entitled to a discount if you have more than one type of insurance policy with the same company.
■ Don't over insure: Be conservative with the car's value. You can only claim what the vehicle is deemed to be worth by the insurance company's assessor in the event of an incident. Check adverts to get a good market indicator of the motor's value. Alternatively, the Revenue Commissioners website (revenue.ie) has a valuation tool for each model/year of manufacture, for vehicle registration tax purposes.
■ Check the excess: The excess is what you agree to pay before you can make a claim. Insurers are imposing higher and higher excesses. This reduces the risks for them, but means you can't claim for small accidents. Excesses of €500 are not uncommon; at that level they negate the value of having insurance.
■ Get a discount by using telematics: The latter is a way of monitoring the location, movements, status and behaviour of a vehicle. You can do it with a smartphone. Insurer AIG offers discounts of up to 20pc for using an app that monitors driving style. AIG says there are potential savings of up to 25pc on premiums. Customers who use the app will be given a 20pc discount immediately and further discounts of up to 5pc will be applied after three months' use, subject to scores achieved.
■ Men: get insured with Its4women. The online insurer markets its business at women, but the law means it cannot refuse to cover men. Because women have fewer claims, it tends to be more competitive than motor cover sold equally to both sexes. A recent EU gender directive - now law in Ireland - means men and women can't be discriminated against on price of insurance.
■ Don't modify: Avoid modifying your car, unless you are increasing its safety. Even a small change, such as new alloys, can increase your premiums. Any changes should first be discussed with your insurer. However, modifications that increase safety, such as installing an alarm or immobiliser, can help cut costs.
■ Small engine: The more expensive and the bigger the engine, the more you are likely to pay. You may also have to pay more if your car is imported or if there are more theft claims on your model. Check with your insurer before you buy, so you can estimate insurance costs.
■ Pay annually: If you can afford to. Paying for cover monthly is the same as taking a high-interest loan from your provider, with interest as high as 20pc imposed on top of the premium for paying by instalments.