Rising Private Car Insurance Premiums
‘The Road to Reform’
We are ALL concerned and intrigued as to WHY Car Insurance premiums are constantly on the increase at present. One of Ireland’s leading Insurance companies and Private Car underwriters (AVIVA) produced the following document in an attempt to explain the situation from their “perspective” We decided to share this with you to maybe help you understand in some way where Insurers are coming from.
Dolmen as Insurance Brokers will always search the market to find you the most competitive quotation for car insurance and WE WILL continue to do this despite the underwriters increasing premiums. We will hopefully get you the most competitive premium available to us, and SAVE you money.
We are all very concerned about the impact of rising insurance premiums on our customers. We want to take this opportunity to explain what’s driving these increases, what the Irish insurance industry is doing to change the situation, and how you can help.
There are a number of factors contributing to the rise of premiums,including:
Excessive Award Levels
- Ireland has the highest claim award level in Europe. The average whiplash payout is €15,000 (Spain/Italy is €3,000,UK is €5,000).
- 80% of all motor injury claims in Ireland are related to whiplash (3% in France). This adds on average €130 to the cost of your motor premium.
- The excessive nature of award levels in Ireland is increasing the incentive to commit insurance fraud, which costs the Motor Insurance industry in excess of €100m per annum.
Inconsistent Award Levels
- Court award levels for injury claims continue to rise year on year (34% increase in High Court award levels from 2013 to 2014).
- Most European countries have an appropriate and consistent Book of Quantum, which sets out the level of award that should be paid for a given injury type. Ireland’s Book of Quantum is outdated and not used by the Courts, hence award levels here are hugely inconsistent. This makes it very difficult for insurance companies to price their policies.
Excessive Legal Costs
- 60% of the costs of cases settled through the courts are for legal fees.
- The Injuries Board, which was set up by the Government in 2004 to deal with personal injury claims without the need for legal representation, needs greater powers. 90% of injury Board claimants now attend with legal representation, while 40% of Injury Board awards are rejected and proceed to court.
- The reforms recommended by the Troika committee, as a condition of Ireland’s bailout, including a reduction in legal fees, have yet to be implemented.
Regulation of Insurance Providers
- Quinn Insurance traded recklessly, and it is estimated that its collapse will ultimately cost the Irish taxpayer in excess of €1bn (2% levy on your motor premium).
- Enterprise Insurance, which sold insurance products in Ireland while being prudentially regulated out of Gibraltar, is currently being wound up due to insolvency.
- This follows the liquidation of Setanta insurance, with outstanding claims liabilities of over €90m. The High Court have deemed the Motor Insurance Bureau of Ireland (MIBI – representing the Irish insurance industry) liable for the claims outstanding against Setanta.
- In no other industry would companies be asked to bailout a competitor who becomes insolvent through reckless trading .
- Engaged the Government on the drivers of rising insurance premiums: Key industry representatives have worked with Government offices,including that of An Taoiseach,to ensure that they are fully aware of the need for reform within the insurance market in Ireland. Viable solutions have been put forward that can have a positive impact on premiums going forward.
- Assisted MIBI in the appeal of the ‘Setanta’ High Court decision: Industry leaders are working with the Motor Insurance Bureau of Ireland (MIBI) in an effort to successfully appeal the High Court decision which has deemed the insurance industry to be liable for the outstanding claims of Setanta. If this appeal is unsuccessful, customer insurance premiums could be negatively impacted by as much as €45 on average.
- Successfully lobbied for change in the UK: In the UK,following a relentless campaign,the Government has announced its intention to legislate for a policy of ‘Care not Cash‘ for minor whiplash claims. The introduction of a similar policy in Ireland would mean that someone unfortunate enough to suffer a minor whiplash injury would have the full cost of rehabilitation settled by the Insurer, in lieu of a cash lump sum of €15,000 or more. We would support the introduction of this approach in Ireland.
- Adopted a zero tolerance approach to insurance fraud: There has been a significant increase in the resources dedicated to detecting, preventing & investigating suspected fraudulent claims. Collaboration with An Garda Siochana has resulted in a number of fraudulent claimants being convicted and sentenced to prison for insurance fraud.
There are a number of additional changes that could significantly reduce the cost of claims and,as a consequence, lower the cost of your insurance.These are:
- A reduction in legal fees, as recommended by the Troika. The insurance industry is committed to working with the judiciary in this regard to create a better system for all stakeholders.
- Introduction of a consistent & realistic Book of Quantum for Ireland, to be adhered to by the insurance companies, the Injury Board,and the Courts.
- Additional Garda resources to increase the level of insurance fraud investigation, leading to more custodial sentences being handed down where it is proven that insurance fraud has taken place.
Your support is needed:
The lack of action to make this happen is a national concern and it is not acceptable. We are fully supportive of the industry drive to reform the insurance market in Ireland. You can assist by asking your local public representatives to address this important topic as a matter of urgency in the Oireachtas.
Insurance Ireland – ‘Driving Change – Measures to stabilise Motor Claims – 2015’
- Insurance Ireland Press Release 15/09/2015
- Insurance Ireland Media Briefing pack 15/09/2015
- Whiplash cost per policy of c.€130 calculated as follows – 33% of total industry motor claims €979m divided by 2.5m licenced vehicles on the road (Dept of Transport Tourism & Sport – Bulletin of Vehicle & Driver Statistics – August 13th 2015)
- Court Services Annual report 2014
- Insurance Ireland 2014 Factfile report (page 20)
- Irish Broker Magazine Article -Feb 2016