Insurers drive up cost of being on the road

The biggest one-year hike in motor insurance prices in more than a decade is wiping out any savings hard-pressed motorists are making at the petrol pump.

According to the AA annual survey of motoring costs, the 20% rise in premiums for the typical motorist is ensuring that motorists are not saving any money due to the fall in fuel prices.

The insurance sector is blaming higher levels of claims, more people using the courts to seek compensation and low levels of reserves in the industry for the hikes in premiums.

Both Liberty Insurance and RSA have announced layoffs in recent months, as insurers struggle with losses in the motor insurance sector.

Earlier this year, two of the biggest insurers in the country, Aviva and Allianz, confirmed they would no longer be providing cover to new customers driving a car that was 15 years or older – even if the car has a valid NCT.

Director of Consumer Affairs at the AA Conor Faughnan said the bad news for motorists is the rise in insurance costs is only set to worsen into next year.

“This is the biggest one-year rise in insurance prices in well over a decade. It marks a big change in the market with insurers nervous about rising claims and about improving their reserves.

“All prices are rising but if you have had no claims or points in the year and have done nothing wrong it feels unfair. Unfortunately the trend is set to continue for the rest of the year and into 2016, in the AA’s view,” he said.

The spiralling cost of motor insurance premiums has led the Consumer Association of Ireland (CAI) to call on the Government to investigate why costs are so high and how they can be tackled.

Policy and council adviser with the CAI, Dermott Jewell, said the continuing rise of motor insurance premiums was now “a very real problem” for struggling consumers.

“In all honesty, very little has gone down in terms of motoring costs in recent years.

“The cost of fuel is the one exception but this is the one volatile component in the cost of running a car. What this serves to highlight the very real problem in the the level and manner in which insurance premiums are increasing,” he said.

Mr Jewell said the CAI had called on the Government to set up an inquiry into motor insurance costs.

“The CAI will repeat its call and will write to the minister to see if consideration can be given, even if just for a short time, to re-establishing the Motor Insurance Advisory Board to review why costs are so excessive and what can be done to counter this,” he said.

That body was set up by former tánaiste Mary Harney in 1998 and, in its report in 2002, it made 67 recommendations to deal with soaring insurance costs.

In somewhat better news for motorists, the AA survey found that the average cost of running a family car for a year is €10,593 – down a paltry €17.60 on the same figure for last year.

Fuel prices are well down on last year. The average price of petrol at 145.3 cent per litre in July is just over 7% less than it was 12 months ago.

For a typical motorist in a band B car, that works out at a saving of €144.74 annually but they will still pay €1,761 for their year’s fuel (of which 60% is tax).

Other motoring costs such as the cost of oil, tyres, servicing, repairs, replacements and garage parking were found not to have changed significantly.