Department of Transport officials question motor cost hikes

Department of Transport officials last year questioned motor insurers’ claims that huge premium increases are justified given the “unprofitability” of the industry.

Motorists have been hit with spiralling costs of motor insurance over the past two years with premiums now 60% more expensive than in January 2014 and 35% higher than this time last year.

Insurers claim the price hikes are justified and necessary given the high cost of claims in Ireland, new solvency requirements, fraud and underpricing in previous years.

In briefing notes to the then-Transport Minister Paschal Donohoe ahead of an Insurance Ireland dinner in September 2015, Department officials cast doubt over the unprofitability of the sector, however.

“It appears that motor insurers are now imposing higher premium rates to return themselves to profitability or to boost profitability after a number of years of insurers competing for market share with prices driven down accordingly and possible underwriting losses in some cases.”

The document is also critical of insurers’ unwillingness to insure certain drivers.

The issue has been most keenly felt among those with older vehicles, motorcyclists and owners of small commercial vehicles.

Officials advised the minister that motor insurers’ refusal to quote for certain business “runs somewhat counter to the spirit of the Road Traffic Acts”.

“It inhibits the State’s requirement for basic level of compulsory insurance to be in place, and it frustrates customers seeking transparent affordable motor insurance,” the official continued.

In his speech at the same dinner, the Minister warned insurance companies that he was concerned over the introduction of such policies and advised those present that consumers see such decisions as “illogical, discriminatory and arbitrary”.

Despite Mr Donohoe’s appeal to insurers to “reconsider these practices” almost ten months ago many drivers continue to encounter difficulty in finding reasonable prices.

Further documents reveal that Mr Donohoe’s successor, Independent TD Shane Ross expressed concern over the same issue.

Mr Ross said his Department were “not in receipt of any information from the insurance industry as to why the owners of such vehicles are either having difficulty in getting insurance or even being quoted for insurance”.

The rapid increase in motor insurance premiums also spurred Mr Ross to express concern over the the possibility of higher costs forcing more uninsured drivers onto the roads.


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