Thursday 27 June 2019

Angry drivers fear elevated insurance premiums will now become new norm

Brendan Nevin, AA Ireland chief executive
Brendan Nevin, AA Ireland chief executive
Charlie Weston

Charlie Weston

Car insurance costs are falling, according to official statistics. The cost of cover fell by 12.8pc in the year to February, according to the Central Statistics Office (CSO).

But drivers still report getting elevated premium quotes, with many questioning the CSO findings.

Hikes in quotes of €100 are not unusual, even though drivers have had no accidents, avoided penalty points and have not made claims in the last year.

Drivers are furious at having to pay so much for motor insurance.

The latest recorded falls in the cost of cover come after average rises of 70pc recorded by the CSO over a three-year period.

The average premium was €450 in 2014 and is now around €750.

Fine Gael's Michael D'Arcy. Photo: Tom Burke
Fine Gael's Michael D'Arcy. Photo: Tom Burke

The fear now is that elevated premiums will become the new norm.

It was in this context that the Government has been accused by motoring body and insurance broker AA Ireland of not doing enough to ensure motor premiums are reduced.

In a hard-hitting report, AA Ireland accused ministers of missing an opportunity to reform the sector.

Motorists are now in a worse position than the start of the motor insurance crisis, AA Ireland chief executive Brendan Nevin said.

The motoring body said Government attention had wavered and reforms have stalled. Surging premium rates were being treated as a crisis by the Government two years ago, but necessary changes are not now being pushed through.

An absence of proper reform and new legislation has resulted in little change for the average motorist. Instead, the Government is now focused on issues like housing and Brexit.

Read more: Five simple reasons why insurance costs should actually be LOWER

"Sky-high premiums are the new normal. People were shocked by this two or three years ago. The shock has worn off but the price increases have not," Mr Nevin said. He accused the Government of treating the issue as yesterday's problem because in recent months the CSO has reported a slight drop in premiums.

The Government set up a Cost of Insurance Working Group that was initially headed up by then-junior minister, and now Cabinet minister, Eoghan Murphy.

Junior Finance Minister Michael D'Arcy is now chairing the working group.

"Given that the crisis is still unresolved we now need to see leadership from the working group and the top level of Government to finally implement necessary changes which would greatly benefit the average motorist," Mr Nevin said.

"Without this proper leadership and action we will still be discussing many of these issues in two years' time."

AA director of consumer affairs Conor Faughnan said legal costs of claims were a major issue.

He said a Department of Finance report found legal costs can add up to 40pc to the cost of a court award.

"The lawyers are absolutely hoovering money out of the system. If the system worked properly they would not be involved," he said.

He said there was no incentive for large insurance companies to reform the insurance market, as they are making money, and have the customer information that ensures new entrants find it difficult to enter this market.

"The big guys can thrive in a messy landscape because they have the information on the customers and on fraud, and the punter picks up the tab," he said.

AA Ireland has been lobbying the Government on five key reforms it wants implemented to bring premium rates down.

The AA wants an independent body to put together a data hub to share information on motor insurance applicants and fraudulent claims.

Data protection laws should be changed to allow insurers to share information on fraudsters, something they are prevented from doing at the moment.

The legislation governing the Injuries Board should be strengthened to stop so many personal injury claims going to court.

The motoring body also wants Garda Traffic Corps numbers increased.

Insurers should also be forced to publish open information on the cost of claims, something the industry has been accused of hiding.

The bottom line is that motorists have effectively bailed out an insurance industry that was caught out under-pricing and under-reserving.

Having done that, the least drivers should expect is for the Government not to let its foot off the pedal when it comes to much-needed reforms that will cut the cost of premiums. Motorists vote too.

Irish Independent

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