GUEST BLOG: An inside look at the Irish motor insurance

By David Hughes, operations director, Getcover.ie

There is a lot of uncertainty in the Irish motor insurance industry at the moment and the industry is in bad need of reform.

As an insurance broker, it’s no surprise to me that almost half of Irish motor insurance customers are dissatisfied with their insurance premiums.

Over the past 18 months they’ve been presented with large premium increases. Triple-digit increases are commonplace now and are difficult to swallow.

The 2016 Carzone.ie Motor Report states that 54% of motorists believe that insurance costs are the biggest obstacle to affording a car. The report also states that 40% of motorists are not satisfied with their current insurance premium.

Unfortunately, we hit the bottom of the motor insurance pricing cycle with a bump about two years ago. As a result of significant losses experienced by insurers over the previous years, there has been a dramatic reaction from insurers as they try to bring their books back to profitability.

When something like this happens, it’s not as simple as spreading the increase evenly across everybody’s premium. Inevitably, insurers look at segments of their business that are preforming most poorly, and that’s where they apply the biggest increases.

For example, certain types of cars and certain age groups and certain occupations will be targeted and, if a motorist happens to fit a couple of those categories together, they will be hit hardest.

Obviously, claims and the costs associated with claims pay a major part in determining an insurers pricing strategy, and something can be done about this.

SHOP AROUND

In 2003 the Personal Injuries Assessment Board (PIAB) was introduced to assist in managing the cost of claims, by removing the need for legal representation and through the introduction of the Book of Quantum (a set scale of awards associated with particular injuries).

Up to then, awards were arbitrary, particularly for whiplash claims, and the idea was to create a fair and speedy resolution process for customers and insurers alike, while reducing legal costs.

Unfortunately, it hasn’t worked out that way. Most claimants bring legal representation before the PIAB and this forces up the cost. Furthermore, a large percentage of PIAB awards are appealed to the courts further pushing up the cost of claims.

David Hughes

A further factor at play is that insurance fraud is costing the industry a staggering €200m a year. Staged accidents occur regularly around the country putting further strain on the industry.

Clearly, a fundamental reform of the system is needed and, as has already been suggested by other commentators, this could be achieved through the formation of a taskforce involving all of the various stakeholders including the insurance industry, the Central Bank, the Irish courts and An Garda Síochána.

Staged accidents occur regularly around the country putting further strain on the industry

However, it’s not all doom and gloom. It’s said over and over again, shop around. Different insurers experience different loses and will apply premium increases differently from each other. As a result, premiums being charged can vary to a significant degree from insurer to insurer.

For example at Getcover.ie we quote a variety of insurers to try and give our customers the best possible value and we find that premiums can vary by as much as €300 or more from insurer to insurer.

Photo (main): Cyril Caton