The stark reality of the rising cost of motor insurance were brought home by the latest Central Statistics Office (CSO) report. Motor premiums were up 38.3pc in the year to July while over the last three years, the average premium is up 70pc, the CSO further reported.
The ongoing rise in insurance costs was one of the main reasons that annual inflation hit 0.5pc, its highest level in three years.
The rise in motor insurance costs means a premium that was €500 last year will now be around €190 dearer while many drivers are being hit with even higher increases, especially if they have a claim, an older car, are young or have penalty points.
Premiums look set to keep rising, despite some in the insurance industry arguing that rates are close to peaking. Two of the largest insurers in the market, RSA and Aviva, warned last week that they expected premiums to keep going up this year.
RSA said injury claims continued to rise and Aviva said it could not rule out more premiums increases as claims costs continued to be a serious challenge to it. While the cost of motor insurance continues to rise, the CSO figures ironically show falls in the prices of petrol, diesel and cars.
John Lowe the Money Doctor said: “The plain fact is insurance companies are in business to make a profit. Huge claims and greater frequency of those claims force the insurance companies to reappraise their costs. With 60% of all court insurance claim awards going to the legal profession for their costs, the Government needs to act quickly to address the serious imbalance with our EU member states. We are also out of sync with our neighbours in the UK when it comes to generosity of awards. Insurance companies know when a claim comes in, irrespective of the circumstances, they will probably have to pay at least half the award. With legal and administration costs on top of that, the insurance company finds it easier to pay up front and minimise what could be far greater costs. It is a vicious circle.”
Greater powers should be given to the Injuries Board to ensure that fewer personal injuries cases end up in the courts, where these legal fees are adding hugely to the cost of settling claims. Awards here, which are higher than other countries, needed to be benchmarked against those in other EU states.
A spokesman for the Department of Finance insisted that it was taking the issue of rising premiums seriously. An inter-departmental working group on insurance costs, headed up by Minister of State Eoghan Murphy, held its first meeting on July 20. However, it is not due to meet again until September 2. The spokesman said pricing was a matter for insurers but that the working group may identify measures to reduce the cost of claims, a move that would reduce premiums.