Further cuts in cost of motor insurance unlikely

THE cost of motor insurance, which has fallen by 35% in real terms over the past three years, is under threat, a top insurer has warned.

Axa boss John O’Neill, appearing before the Joint Committee on Enterprise and Small Business in Leinster House yesterday, said the positive motor claims experience between 2000 and 2003 resulted in significant cuts in the cost of car insurance.

However, over the last year and a half, the trend has gone the other way again despite the introduction of penalty points.

Those rising claims are a “cause of great concern and it is our view that there is no scope for further reductions in premium rates unless there is a clear re-emergence of the favourable trend”.

In response to questions Mr O’Neill said there were no need for any further “draconian” measures or new laws to put an end to the carnage on our roads.

What was needed was unambiguous “enforcement” of the law.

The question of cost of car insurance can be summed up in the word “enforcement” at this stage. Mr O’Neill disagreed with a view expressed by Senator Joe O’Toole that the driving test was inadequate. While off the road training might be a good thing he noted one of his own daughters had to sit the test four times before passing it. By then he was “satisfied” she was ready to take charge of a car, he said.

He rejected the idea that being required to park a car just six inches from the curb was of little value.

Over the past five years the combined efforts of Motor Insurance Advisory board, the Joint Committee, and the initiatives taken by Axa have led to considerable improvements in claims.

Competition has also worked Mr O’Neill insisted and without it Axa would “probably” be charging 40% more for car cover than currently is the case. Competition was working in the Irish market but Mr O’Neill said that was a function of being able to make money from the business. If the legislators want that trend to continue they will have reverse the disturbing trends of the past 18 months, he said.

One of the major problems still facing the sector was the high cost of settlements, which are four times higher than in Britain.

The number of claims in Ireland is significantly lower than in Britain. If that were not so then the cost of car cover here would “go though the roof”, said Mr O’Neill.