THE LATEST FIGURES on motor insurance show premiums have risen by almost 40% in the last year.
According to the Central Statistics Office, the country has experienced a rate of inflation of half a percent in the last 12 months – the highest rate of inflation experienced in the last three years.
It attributed the change, in part, to higher motor, health and house insurance premiums. In the last 12 months, motor insurance costs have risen 38.3%, home insurance is up 11.2% and health insurance premiums increased by 7.6%.
One third of Irish drivers have seen their insurance rise by up to 50% in the last year and it is particularly impacting on younger drivers. Young men in their early 20s are being asked to pay anything between €6,000 and €14,000 a year.
In its defence, the industry has said higher claim payouts necessitated premium hikes, but figures recently released to Fianna Fáil TD Michael McGrath revealed this did not quite add up.
Claims have, in fact, been decreasing across Ireland since 2011. Insurance companies paid out €1.01 billion in 2014. This is less than the €1.5 billion paid out in 2011 and €1.06 billion paid in 2012.
‘An unsustainable model’
Last month Michael Horan of Insurance Ireland told TheJournal.ie that while overall claims costs have been dropping, the premium incomes of companies have also been in decline.
In 2011 we had higher claims it’s true, but we also had higher premium income because there were more cars on the road. The average cost per claim actually saw an increase between 2012 and 2014 and that’s borne out by the figures.
Commenting on what he described as “shocking figures”, Sinn Féin TD Donnchadh Ó Laoghaire said the issue has “far reaching consequences for motorist, workers, businesses and rural Ireland in particular”.
“I am deeply concerned at the move by some insurers to simply no longer quote drivers at first and then after an appeal to quote outrageous figures for simple renewals,” he said.
The root cause of this increase is an industry which until now has survived on an unsustainable model of relying on investments to cover other losses.
“In an age of zero rate returns this model is failing. With interest rates so low across Europe insurance companies are instead penalising drivers, whose record has not changed, with massive unjustifiable increases.”
- With reporting by Cianan Brennan.
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