AA calls for action on insurance hikes

The cost of car insurance is rising dramatically and urgent action will be required to stem future steep increases, the AA, one of the country’s largest insurance brokers, has said.

Unveiling the findings of its analysis on government, legal and industry failings that are driving car insurance costs, prices have risen almost 35% since the start of 2014 and are up 27% in the last 12 months alone, the AA says that the Government can no longer ignore the problem.

Its advice would save the industry €214m each year, equivalent to €107 off the average car insurance premium.

Reasons the insurance industry give for rocketing prices are mostly true or partly true, it says.

A marked spike in injury claims since late 2015, which are not matched by other figures for the numbers of road injuries, is true.

It is partly true that court compensation awards are rocketing, but not by as much as the industry claims, while the claim that more cars on the road is leading to more accidents holds little water, it says, because the increase in traffic volumes is not that great.

It says industry claims that Irish awards are too generous are true, especially for whiplash, and legal costs are also very high.

“The end result is that the industry is loss-making,” said Conor Faughnan, AA director of consumer affairs. “We have seen a number of (firms) pulling back, and we do not see others coming into the market, which will be very bad for Irish consumers.”

The AA says that the level of uninsured driving here is 8% of all drivers, double the number in the UK, and drink driving remains a big problem. Among its major recommendations, the AA wants:

• To abolish the 6.5m windscreen discs printed for 2.4m cars, saving €10m a year.
• The industry to complete its so-called Integrated Information Data Service, to provide deeper understanding of fraudulent claims and fake documentation.
• To standardise the so-called Book of Quantum; reduce compensation claims to UK levels, where whiplash compensation at €5,000 compares with a €14,000 payout here.
• Justice Minister Frances Fitzgerald to strike a “discount rate”. “No justice minister has done so; she has the power to do so,” says the AA.
• To give resources to the Central Bank to regulate insurers. The combined bill for the Quinn Insurance and Setanta Insurance debacles came to “an “unacceptable” €200m. And the Government ought to pursue the Maltese government for the €94m losses linked to Setanta Insurance.
• Justice and transport departments and RSA to work together.