Drivers ‘thrown to the wolves’ of insurance sector by State

Car owners hit with up to 300% insurance hikes have been “thrown to the wolves” of the insurance sector by State institutions who are charged with protecting them, a damning report is to conclude.
Drivers ‘thrown to the wolves’ of insurance sector by State

Insurance companies are heavily criticised by the report, which says their “closed mentality” and unwillingness to share data is a contributory factor in recent motor insurance hikes.

Tougher laws forcing insurance companies to reveal details of claims, awarding greater powers to the Personal Injuries Assessment Board (PIAB) and tougher penalties for drivers caught speeding or on their mobile phone while driving are among some of 76 key recommendations in the report.

The findings are contained in a joint Oireachtas committee on finance’s report on the rising costs of motor insurance, which is due for publication next week, and was seen by the Irish Examiner.

The committee has held a series of hearings into the crisis since the summer.

The cross-party committee, which is chaired by Fianna Fáil TD John McGuinness, expresses “serious concerns” about the bona fides of the insurance sector in promising to provide such details in the future of its own accord.

The draft report concludes that on average, premiums have increased by 37%, but in some cases premium hikes have been in the order of 200%-300%.

“It is apparent that insurance companies in many cases are refusing even to quote insurance,” it states. “In other instances, insurance companies quote but the amounts sought are so large that the net effect is to prevent people from getting insurance.”

It says it is unacceptable that the insurance industry publicly states that certain variables are behind steep increases in motor insurance, yet fail to publicly furnish the supporting evidence.

The committee is conscious of the roles of both the Competition and Consumer Commission and the Central Bank of Ireland in their failures to protect consumers and citizens.

The insurance industry has insisted that the substantial premium hikes are the result of an increase in legal costs and compensation awards, but will not supply supporting evidence for verification.

However, it is the consumer and policyholder who has suffered the most in this debacle, the report states.

The committee concludes that the Central Bank has “abrogated responsibility for protecting consumers” by claiming European Law prevents it from getting involved in pricing and risk.

“Thus, it is the opinion of the committee, that the consumer has been thrown to the wolves,” the report states.

The committee report concludes that 70% of claims are settled privately by insurers outside of both the Personal Injuries Assessment Board and the Courts Service.

As a result, there is no visibility or transparency whatsoever about these claims.

It is as if they have disappeared into a “black hole” to remain ring-fenced from interrogation and wider public scrutiny, Mr McGuinness states in his introduction.

The committee has proposed the powers of the PIAB be modernised and strengthened,

“History has proved that the PIAB made a significant impact in the personal injuries environment following its inception,” the report states. “The facts speak for themselves: awards were reduced by 40% and waiting times to process cases were reduced from three years to seven months.”

Meanwhile, the chief executive of Insurance Ireland Kevin Thompson said there has been a 36% increase in Injuries Board claims since 2008, with whiplash accounting for 80% of all motor injury claims.

Chief executive of Insurance Ireland Kevin Thompson
Chief executive of Insurance Ireland Kevin Thompson

Insurance Ireland has been calling for the level of personal injury awards to be benchmarked internationally, as such awards in Ireland are about three time those in the UK.

More in this section

Puzzles logo
IE-logo

Puzzles hub

Visit our brain gym where you will find simple and cryptic crosswords, sudoku puzzles and much more. Updated at midnight every day.

Puzzles logo
IE-logo

Puzzles hub

Visit our brain gym where you will find simple and cryptic crosswords, sudoku puzzles and much more. Updated at midnight every day.