Insurance companies asked 'who is looking after customers’ interests' as costs spiral

Insurance companies have been accused of engaging in a “blame game” while motor insurance costs spiral out of control.

Fianna Fáil’s finance spokesman Michael McGrath said, despite premiums increasing by 38.6% in the year to July, car insurance costs may have increased further since then, even as one firm was urging customers to play a role in reducing them.

Deputy McGrath referred to a letter issued by insurer Aviva to its customers in which it said it was “very concerned about the impact of rising insurance premiums” and sought to explain the reasons for the price rises.

In the letter, Aviva said Ireland had the highest claim award levels in Europe, mostly linked to claims of whiplash, and that “the excessive nature of award levels in Ireland is increasing the incentive to commit insurance fraud”.

The company said there were inconsistent award levels and it claimed there had been a lack of regulation, referring to difficulties at companies such as Setanta Insurance, Enterprise Insurance, and Quinn Insurance.

Aviva said the Injuries Board needed more power, and it said there was a requirement for “additional garda resources to increase the level of insurance fraud investigation, leading to more custodial sentences being handed down, where it is proven that insurance fraud has taken place”/

Representative body Insurance Ireland said: “We share our customers’ frustration at the increases in motor premiums and recognise the public concern that exists on the issue. High premiums are not in insurers’ interests, as the threshold of affordability is raised, it leads to more uninsured driving, which is a major road safety issue.”

It said more traffic enforcement was also needed and added.

“Premiums are a function of the cost of claims and, at present, motor insurers are pricing insurance in an environment where the number of claims is increasing on top of the increasing cost of processing them and settling them.”

Fianna Fáil’s finance spokesman Michael McGrath
Fianna Fáil’s finance spokesman Michael McGrath

In emails, Aviva sought customers’ help.

“You can help us by asking your local public representatives to address this important topic as a matter of urgency in the Oireachtas,” it said.

However, Mr McGrath said insurance firms now seemed to be blaming others for the soaring cost of insurance.

“The blame game is now in full swing,” he said.

“We now have a situation where all the stakeholders are blaming each other for premium hikes, but it begs the question, who is looking after the interests of consumers in all of this?

“Every week now, I am being contacted by motorists who are receiving a renewal notice in the letterbox with much larger increases. Premium increases of 60%, 70% and even higher are not uncommon.”

He said there needed to be greater independent oversight, adding that the Government needed to set a tighter deadline for the task force charged with investigating the issue to report back and then needed to quickly implement its recommendations.

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