Consumers want action, not promises
Joining the clamour of complaints from consumers and small business firms, the joint Oireachtas Committee on Enterprise and Small Business has now fired another broadside at an industry where profits are nothing short of obscene.
The figures speak for themselves. A damning report has showed Ireland’s motor insurance sector is ten times more profitable than Britain’s. Huge profits of €183 million have been made on the backs of hard-pressed Irish drivers, effectively wiping out losses of the previous three years in one fell stroke.
Because no competition worthy of the name exists in the market, consumers are caught in a cartel-like vice. Householders and car owners pay through the nose for cover. Small companies are forced out of business as premiums soar, causing redundancies and killing off successful firms which have never had a claim made against them.
The work of the Personal Injuries Assessment board has yet to impact on premiums. The compo culture has yet to be eradicated and the litigation factor has yet to be resolved.
In the face of repeated criticism of their excessive charges, the insurance industry has adopted an arrogant stance, a deplorable attitude manifest in the pages of the Oireachtas report which claims the committee was “misled” by presentations from motor insurance companies on the profitability of the market. The members were also “unhappy” with industry explanations on why premiums are so high and felt they were not getting the full story.
Among its 40 recommendations aimed at reducing premiums is a proposal to abolish the Government’s 2% levy on premiums. Effectively, that would put moral pressure on insurance firms to provide cheaper premiums in return.
If the Coalition is serious about tackling the high cost of insurance, it should put its money where its mouth is and axe the levy immediately.
Another realistic proposal would result in uninsured vehicles being confiscated. With an estimated 80,000 uninsured cars on Irish roads, tough sanctions should be imposed for breaches of compulsory motor insurance obligations.
Given the inordinately high awards in insurance cases, there is a compelling case to set up an expert group to compare the levels of awards in the Irish courts with other jurisdictions. At least this would provide a benchmark to be used as a guide by judges and victims.
In addition to the highway robbery of legal fees charged in insurance cases, lack of competition in the market is another major cause of excessive premiums and the committee makes a welcome call for more foreign companies to operate in Ireland so that people can shop around for better deals.
As chairman Deputy Donie Cassidy succinctly put it: “As we are in the single European insurance market we do not understand why there are so few companies competing for business in the Irish market.”
That there is an urgent need for far-reaching reforms of the Irish insurance industry is beyond dispute. Consumers are sick and tired of being ripped off by companies laughing all the way to the bank.
The Coalition should take steps immediately to ensure policy holders get substantial premium reductions. What consumers want from Government is action, not promises.
