Watchdog slams insurance price hikes

A leading consumer watchdog has slammed plans by insurance companies to impose more hikes to premiums this year, claiming the industry and regulators are effectively “softening up” the public to meekly accept increases at a time when most other costs are tumbling across the economy.

The warning was made as it emerged that the cost of motor insurance premiums could rise by as much as 25% this year because insurers are losing large amounts of money.

It came as Liberty Insurance announced it is set to axe 270 jobs across Ireland.

Any price hikes would be on top of the huge price increases in premiums that have already occurred in the past year.

While most items on the consumer price index have fallen, CSO figures show that the cost of motor insurance is one of the few items that have soared in recent times.

Car insurance premiums have already increased by an average 16.3% in the year, and the cost of home insurance has risen by 3%.

Brian McNelis, director of general services at industry group the Irish Brokers Association, warned that more large increases are probably on the way.

“The [consumer price index] data unfortunately reflects what we have been signalling since the beginning of the year — motor rates have gone up significantly and will continue to do so, they may increase a further 25% by year end,” Mr McNelis said.

“Bottom line is that motor insurance continues to be unprofitable in the Irish market due to prices being pushed to artificially low levels by heightened competition.

“Much of this was driven by direct and online insurers, but increasing claims volumes, the cost of claims, and insurance fraud are all playing a part,” he said.

However, a leading consumer advocate said that price increases are already indefensible.

“It is no doubt a softening up of consumers by the industry,” said Michael Kilcoyne, deputy chairman of the Consumers’ Association of Ireland.

“They expect consumers to meekly accept this. They have a captive market in motor insurance. The industry is using its monopoly to push up prices. But when it comes to paying out [on claims] they look for every loophole that applies.”