Rents and insurance end 2015 with large hikes

Motorists and private tenants paying rents saw the largest increases for years, as costs of insurance and rents rose steeply again in December.

CSO figures published yesterday showed car insurance and private rents were the standout features of the consumer price index in 2015, registering sharp increases even as most other items, including food and interest payments on mortgages, either tumbled or rose only slightly in the year.

Car insurance shot up 4.4% in December and posted an annual rise of 31.1% — the highest year-on-year rise recorded and readily available on the CSO statistical online database series which starts in January 2003.

After rising 0.3% in the month, rents charged by private landlords shot up 9.6% in December from a year earlier.

That is only slightly lower than the annual increase of 10.5% posted in August — the highest rental price inflation recorded since the end of the boom years in late 2007 when rents were rising by an annual rate of 12.1%.

In contrast, local authority rents fell by 0.4% in December and were only 0.7% higher from a year earlier, while mortgage interest costs were 7% lower from a year earlier.

The increases are all the more remarkable because the prices of most other goods and services are falling in Ireland and across the rest of the eurozone.

As low crude oil prices depress prices, Ireland’s overall consumer price index index fell last month and was only 0.1% higher than December 2014.

That left the annual rate of inflation down 0.3% in 2015. Inflation was only 0.2% and 0.5% in 2014 and 2013.

The insurance industry has long argued that car premium hikes are justified to stem the losses incurred by general insurers.

Representatives of the industry and brokers also say that legal costs and settlement costs in Ireland are too high.

They have previously predicted that car insurance prices could rise a further 15% in 2016.

Standard & Poor’s in a report on Wednesday predicted that Irish car insurers would continue to be loss-making for a number of years.

In November, the Automobile Association called for the setting up of a taskforce, led by the Department of the Taoiseach, to assess the best ways to rein in costs.

The AA’s action plan largely backed the complaints of insurers about high costs of claims.

However, Michael Kilcoyne, deputy chairman of the Consumers’ Association, said yesterday that because motor insurance is required by law, the insurance industry has a captive market.

The Government should examine the industry from a consumers’ perspective, he said.

“And that captive market means they can charge what they like. And when they get into difficultly such as Quinn Insurance they are bailed out.

"The whole of the insurance industry needs to be examined,” said Mr Kilcoyne.

The industry has previously secured non-jury courts to assess settlement claims, but prices are rising again, said Mr Kilcoyne.

“In relation to rents this [the large increase] was to be expected to happen,” he said.

“The main reason behind this was that the Government took a decision five years ago to stop building local authority houses.

“Most authorities built a few thousand houses a year. But all that came out of the system. The end result in that there is a shortage of houses.”


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