Insurance review has far-reaching implications

The rising price of car insurance not only affects the average car owner but also the tourist sector and anyone whose livelihood depends on cars, writes Aideen Ginnell

The cold facts don’t make for pretty reading: motor insurance policies have gone up by 35% in the past year alone, and by a staggering 60% over the past two years.

As someone who is about to renew their car insurance, and as an employee of a communications agency with a strong automotive interest, I have been following this issue with great interest.

What is really happening behind the walls of Leinster House and how quickly, if ever, will the rumblings of discontent transfer into the results that will bring a stabilized car insurance market?

The players

Insurance Ireland has been shouting about this issue for some time, calling for greater powers to be granted to the injuries board and for Irish whiplash claims to be brought in line with EU averages. However, it seems it was the Fianna Fail motion tabled by Michael McGrath, Niall Collins and Robert Troy that firmly put this issue on the agenda.

Like the mortgage interest rates and Irish Water, Fianna Fail appear to be putting their weight firmly behind this one. (Which ensured the motion was successfully passed in the Dáil.) Since then journalists, motor-related businesses and other parts of society have joined in, calling on the powers that be to deal with the crisis… and fast.

The Department of Transport, under a FOI request, released a memo in early May which (rather naively) seemed to indicate that the problem was due to competition.

It stated: “Motor insurers are now imposing higher premium rates to return themselves to profitability or to boost profitability after a number of years of insurers competing for market share, with prices driven down”.

However, in true Irish political style the Government has responded to the calls by requesting a review of the industry by the Central Bank; a move that appears to have received cross- party approval or at least not loud objections.

To add fire to the mix, the Consumer Agency is now calling for the Central Bank to be brought before an Oireachtas Committee for failing to identify the crisis earlier. They claim the Central Bank was in fact encouraging insurers to hike their premiums to stem losses instead of looking at underlying factors.

Enterprise Rent-A-Car leading the charge

Leading the business charge in calling for Government to address the surge of personal injury claims is Enterprise-Rent-A-Car (part of Enterprise Holdings) and its Managing Director for Ireland, George O’Connor.

Enterprise has repeatedly pointed out the paradox that the cars we drive and the roads we drive on have become safer than ever, however the number of personal injury claims being made to continues to rise. (The value of those claims, meanwhile, has more than doubled in the past 10 years.) Here’s what Enterprise is calling for:

Strengthening the Injuries Board: At present, claimants are not legally obliged to accept an Injuries Board award, with about 40% of awards being rejected. So where do people go to get their awards? It would appear the answer lies with the legal profession and our court services.

Internationally benchmarking awards: With 8 out of 10 motor injury claims in Ireland being for whiplash and average settlements three times higher than in Britain and other EU countries, this is unquestionably a priority for review. Many believe the Department would do well to consider an EU benchmark for soft tissue injuries. This would bring us naturally in line with other EU countries where liability costs are lower, where the average pay-out is lower – and where the price of motor insurance is not rising by 30% each year!

Setanta: The insurance industry, uniquely, is being forced to cover the cost of Setanta’s failing. And they are doing this by adding on average 50 euro onto each premium. So ultimately we are covering the cost of Setanta’s demise – hardly fair on the average motorist.

Next steps

I’ve heard rumours, although not very loud ones, that the insurance report is due at the beginning of the next Dáil term. In the meantime, the summer is almost upon us so most decisions are going to be kicked forward. All we can do is wait.

Fianna Fail will undoubtedly maintain political pressure on this issue, especially as it has got cross sector attention, and they will want to ensure they remain the official flag bearers.

The Personal Injuries Board is also currently reviewing the Book of Quantum (a document for reflection on prevailing levels of awards) and those results are due in the coming weeks – stand by for further debate.

Ultimately, it seems that change is inevitable, although there’s a mountain of red tape to wade through first. In the meantime, like most car owners around Ireland, I’m wondering how many more policy renewals I’ll have to go through before calm is finally restored to the insurance market.

Aideen Ginnell is a Senior Client Executive with Cullen Communications, specializing in Public Affairs

Topics: Blog, enterprise rent-a-car, insurance, ireland, motoring, cars, review

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