Why we need to move now to end this scandal of ‘no quotes’ for older cars
There are so many dysfunctional aspects to the Irish insurance market that this is likely to be the first in a series of articles on the topic.
But I want to start by focusing solely on the emerging trend of insurance refusals due to the age of the motorist’s transport – something readers of Independent Motors have been complaining about for a long time.
Put simply: this treatment of policyholders is difficult to justify.
Analysis by the Road Safety Authority indicates that vehicle condition is a contributory factor in fewer than 1pc of all accidents.
Excuses offered by insurers include an assertion that ‘set-up’ accidents frequently involve vehicles that are more than 10 years old.
That is a faulty analysis.
The pursuit of exaggerated, or fraudulent claims, results from the actions of individuals – not from the vintage of the vehicles involved.
So it seems we now have the crazy situation where a policyholder who has owned and insured the same car for more than a decade is being told they are an unacceptable insurance risk.
Or, at best, they are restricted in their ability to switch from one company to another.
So who is that likely to hurt most?
Obviously, it is the law-abiding citizens – those who are most hard pressed to make ends meet in discharging their insurance obligations along with all their other transport and household bills.
And, don’t forget, many of them have no viable public transport options.
Does the Government care? It seems not.
In an interview published in The Times (Irish edition) on July 20 last the minister with responsibility for insurance, Michael D’Arcy, is recorded as stating his priority is “establishing a better, stronger insurance sector. It’s important that companies are profitable as well”.
This implies that the profitability of insurers is to take precedence over more important societal concerns.
Surely that puts the cart before the horse?
To put matters in context: There is an obligation on Ireland Inc as a member state of the EU to ensure all Irish-registered motor vehicles are insured. The Central Bank tells me it is the responsibility of the Department of Transport to implement those EU directives, which must be undertaken in a manner consistent with the interpretation of various provisions by the European Court of Justice.
The problem there is that the Minister for Transport has no role in regulating the insurance sector.
The stock answer from the Minister for Finance is that he has no power to control the commercial decisions of insurers.
So who monitors the conduct of insurers?
There are effectively only six motor insurers prudentially supervised by the Central Bank.
It seems to be beyond our capability currently to ensure that collective actions by those companies are not allowed to frustrate the obligation which rests on Ireland to ensure that all motor vehicles are insured.
As has now been acknowledged with the banking sector, there is a clear need for a Financial Conduct Authority separate from the Central Bank to improve the corporate culture in the insurance industry.
Rather than condemning all vehicles of a certain age, the answer to ‘dodgy claims’ is for insurers to fight such cases and pursue criminal prosecutions where a judge in the civil action has made a finding of fraud.
There have only been two such prosecutions since the introduction in 2004 of deterrents to exaggerated claims which include a €100,000 fine and 10 years in jail. In fairness, recent media reports indicate that motor insurers are now fighting more actions rather than just settling and passing on the cost to hard-pressed policyholders.
The law on unjustified discrimination based on the age of the policyholder is, however, more clear. The refusal of a quotation, either on the basis of youth or maturity, was held to be contrary to the terms of the Equal Status Acts 2000-2008.
This was clarified in the 2003 case of Jim Ross v Royal Sun Alliance pursued by the Equality Authority against the insurer who could not produce statistical data to support their commercial decision to refuse to quote for motorists aged over 70.
Mr Ross was also awarded compensation equivalent to three years’ premium.
In 2014 the Equality Authority was subsumed into the Irish Human Rights & Equality Commission but they have yet to investigate whether age-related loadings are currently justified at a market level.
Pricing discrimination of insurance products on the grounds of gender has been contrary to EU law since December 21, 2012.
However, some brokers express the view that this has merely increased the prices for both men and women in the younger age groups. You may be told that there is already a solution for policyholders who are refused motor insurance in the form of the ‘Declined Cases Agreement’.
The problem with that is that the system is run by the insurers’ lobby group, Insurance Ireland.
While there is a provision that an excessive quotation can be classified as ‘tantamount to a refusal’, there is no independent assessor of what qualifies as ‘excessive’.
For some semblance of natural justice and fair procedures for policyholders, would it not be preferable for this role to be assigned to a statutory body such as the Financial Services Ombudsman?
* After decades working in the insurance industry Dorothea Dowling became Group Liability Manager of self-insured CIE until her retirement in 2013.
She is a Chartered Insurer as well as an accredited mediator and, among a number of professional qualifications, holds a Masters of Law.
She is probably best known as Chair of the Motor Insurance Advisory Board which was a previous statutory investigation into the cost of insurance which reported in April 2002.
Its 67 recommendations were accepted by government and the cost of motor insurance reduced by 40pc over the following decade.
Those measures included establishment of the Personal Injuries Assessment Board of which she was Non-Executive Chair until April 2014.
Dorothea has been highly critical of the culture of the insurance industry that increased premium charges by 70pc over a three year period to 2016. She believes there are numerous failures by government to protect the legitimate interests of policyholders.