Finance Minister Michael Noonan has been warned squeezed motorists and businesses cannot afford to wait until the end of the year for a review of spiralling insurance costs to be published.
The Department of Finance is undertaking a review of the motor insurance market after rapid price increases over the past 12 months have seen premiums surge 34%.
Speaking in the Dáil in response to a query by Fianna Fáil TD Thomas Byrne, Mr Noonan reiterated his stance that the review would be finalised by the end of 2016.
The finance minister came under pressure from Mr Byrne’s Fianna Fáil colleague, finance spokesperson Michael McGrath, to fast-track the process, however.
Mr McGrath said he accepted the minister did not have the power to directly affect insurance costs but warned that the high cost of motor protection would harm consumers and stunt economic growth if allowed to persist.
“This issue cannot wait until the end of the year… While the industry has a role to play in this regard and must have its voice heard, the voice of consumers also needs to be heard. Deputies hear day in and day out about dramatic increases in motor insurance premiums.
“These increases are occurring across the board but younger drivers and the owners of older vehicles, in particular, are being hammered by increases in insurance premiums.
“The current rate of increase is not sustainable as it will act as a drag on the economy and impact on the business community. We need to get to the bottom of the factors driving the increases and then tackle them,” Mr McGrath said.
The focus of the first phase of the review is on the motor insurance compensation framework.
Issues in this regard were highlighted by the collapse of Setanta Insurance and subsequent wrangling over whether the Insurance Compensation Fund or Motor Insurers Bureau of Ireland was liable for policyholders’ claims.
Mr Noonan said the first phase was “nearing completion” but was unable to say whether policy initiatives could be introduced once it has been finalised or whether this would only happen once the entire report has been published.
The second phase of the review will specifically examine the spiralling cost of motor premiums which are now 60% more expensive when compared with January 2014.
“Many factors are involved in the dramatic escalation in motor insurance premiums, including court awards, the need for a review of the Personal Injuries Assessment Board, legal costs, false and exaggerated claims, regulatory oversight, and the lack of transparency regarding the profits earned by insurance companies. All these issues must be examined,” Mr McGrath added.
The insurance sector argues an increased number of claims, growth in the number of people going to court to seek compensation, and low levels of reserves in the industry are to blame for the hike in premiums.
Industry experts have criticised insurance companies for financial mismanagement which they claim has contributed to the increases.
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