SOME DRIVERS HAVE seen their car insurance premiums rise by 400%, according to Sinn Fein’s Pearse Doherty.
Yesterday the Dáil was back to discuss the price increase drivers were facing and many TDs wanted answers.
Recently, the Central Statistics Office claimed that premiums have risen by more than 30% in the past 12 months, however Doherty said he has been hearing of cases where premiums are up between 200%-400%.
Risk of losing his livelihood
Referring to two cases, he said a taxi driver had seen his car insurance rise from €1,400 to €7,000 per year, which resulted in him having to go to a money lender so he did not lose his taxi plate and his livelihood.
In another case, he said a young driver, with no claims, had seen his insurance rise from €970 to €1,495. This rise resulted in him giving up his car.
The insurance industry and others have been quick out of the traps to try to explain this huge increase. It points to bigger claims payouts, fraud, Setanta Insurance, regulatory costs and so on. In fact, according to the insurers, everyone from the claimants to the legal people who represent them to the cases, the judges and the fly-by-night companies is to blame. While there is truth in all of that, I am not convinced it is the whole story.
He said it is time to ask fundamental questions about the business model used by motor insurance companies.
It is time we asked questions about whether the regulator has done its job in ensuring the industry has been operating in a sustainable way.
Fianna Fáil spokesperson on Jobs, Enterprise and Innovation Dara Calleary described efforts made by the government to tackle soaring motor insurance premiums as “extremely feeble”.
“Fianna Fáil is setting out clear proposals to tackle motor insurance costs. This would involve re-establishing the Motor Insurance Advisory Board which was previously successful in reducing motor insurance premiums,” he said.
We cannot rely simply on data from insurance companies to justify increases.
Minister for Finance, Michael Noonan said both the insurance industry and the Central Bank state that the frequency of claims has increased over the last year, associated with improving economic conditions and the increase in the number of large claims.
Noonan also said the insurance industry reports that there is a high level of insurance fraud in Ireland and has a comparatively high number of uninsured drivers.
This in turn leads to increased costs on the insurance industry which handles resulting claims through the Motor Insurers Bureau of Ireland. All of these costs are fed back to the consumers through increased insurance premiums.
“I am prohibited from interfering in the cost of insurance products,” said Noonan.
He said a review of policy in the insurance sector is being undertaken in consultation with the Central Bank of Ireland and with other departments and agencies, with an objective of recommending measures to improve the insurance sector.
The first phase of the review of policy in the insurance sector is concentrating on an examination of the framework for motor insurance compensation in Ireland after the failure of Setanta.
However, Noonan admitted the lack of insurance data and statistics available from insurance companies is concerning.
The lack of data presents difficulties from a policy analysis and development perspective.
In relation to flood insurance, the minister said a fully functioning insurance sector should be able to supply customers with flood insurance at a reasonable cost.
He said department officials were researching the area of flood insurance, which will include an analysis of the different approaches to flood insurance taken in other countries.
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