Up to €200 could be wiped off the average annual motor insurance premium if just a few changes were immediately implemented by the Government and the insurance industry, it has been claimed.
Figures released by the Central Statistics Office (CSO) show premiums jumped by 38.3 per cent over the past 12 months, an increase of almost €200 on a €500 policy. The picture painted over an extended period is even bleaker – with the cost of car insurance said to have climbed by 70 per cent over just three years.
Motor insurance companies have blamed the rising cost of claims for the price spike but AA Ireland’s director of consumer affairs Conor Faughnan said insurance companies are, at least in part, to blame for a “sickness in the market”.
“Prices are going up and the market is getting larger but competition is disappearing and that is a sign of a sickness in the market,” he said.
“There are only five or six insurers active in the market now and there has been huge consolidation.”
‘Dragging their feet’
He said multinational insurers operating in other jurisdictions are reluctant to open here “because Ireland will not clean up its act. We should be really attractive to French and German insurers”.
“They could come in here when premiums are high and they wouldn’t have any historic claims book here but they are unwilling to do so.”
He said the Irish insurance sector was “really bad at data sharing” and he accused companies of dragging their feet with regard to basic steps towards modernisation.
He said moves towards creating a comprehensive information hub accessible to all insurers, which would carry details of all motor insurance policies, had stalled. “If that was working properly, there would be no need for letters proving no claims bonus or anything like that that. That simple switch would make the entire market more transparent and would make fraud a lot more difficult,” he said.
Chaotic market
He pointed out that insurers are supposed to share data with the Garda but rarely do, blaming data protection issues. “The same operators are able to share information with the police in Northern Ireland – miles up the road from Dublin without any problems.”
He described an absence of transparency and a chaotic market as a benefit to existing insurers. “I can’t really see any evidence that they want to tidy things up because they understand the murky waters of the Irish market better than outside competition.”
He also highlighted the uncertainty surrounding the discount rate, the assumed rate of investment return resulting from a big payout if someone faces a lifetime of challenges, following a crash. Until recently, courts in the Republic assumed a lump sum would grow at a rate of 3 per cent per year.
But a 2014 court judgment set it at 1 per cent. If this rate is lower, payouts might have to rise and companies charge policy holders more.
Mr Faughnan called on the Minister for Justice Frances Fitzgerald to set the discount rate as a matter of urgency.
