Motorists look set to reap dividends from the success of the penalty points system in reducing road deaths with insurance companies now considering freezing the cost of motor insurance.
Ireland's largest motor insurer, the Hibernian group, has said it is reviewing an earlier decision to raise the price of motor insurance this year as a result of the penalty points system. If it does decide to hold premiums at current levels, it could signal that motor insurance costs have finally peaked.
Hibernian had told its customers that the cost of motor insurance would once again increase to levels broadly in line with the rate of inflation. A marked improvement in the profitability of this business, following the introduction of the penalty points system, has prompted a review of whether any increase in premiums is necessary.
Hibernian's group finance director, Mr Tony O'Riordan, said a decision would be taken shortly.
"We are now looking at whether there is a need to increase premiums for inflation. Of course this could be reversed if the trend were to change."
He pointed out that road deaths in the Republic were still twice as high as in the UK and that the company would have to continue to monitor the effectiveness of the system in further reducing accidents. Hibernian's general insurance business made a profit of €27.4 million last year after two years of losses. Motor insurance accounts for about half of this business. The company has warned about other threats facing its general insurance business, including the high level of court awards in personal injury cases and the increasing incidence of claims for damaged property as a result of severe weather.
Yesterday the Irish Insurance Federation (IIF) said the November 2002 floods had resulted in insurance claims of €50 million. In total some 1,358 insurance claims were lodged of which 1,171 were household claims costing €39 million. A further 187 claims were for damage to commercial property costing €11 million. Much of the flood damage affected properties close to Dublin's Tolka river and its tributaries last year.
The highest bill faced by insurance companies for weather-related damage to property was as a result of Hurricane Charlie in 1986, which led to the payment of claims worth €84 million. The IIF has called on the Government to establish a properly resourced National Flood Defence Agency to implement a national flood strategy.