Oireachtas group targets car insurance reform

An increased transparency in how premiums are calculated, benchmarking compensation payouts with international awards, and the phasing out of paper insurance discs are some of the recommendations published by an Oireachtas working group tasked with examining the cost of car insurance.

The cost of insurance working group has published a list of 40 recommendations for the industry ahead of its report, due next month. Chaired by minister of state at the Department of Finance, Eoghan Murphy, the group has also suggested insurance companies should be permitted and compelled to require proof of NCT/CRW (certificate of roadworthiness) before offering car insurance.

Mr Murphy believes it is possible to reduce the cost of car insurance but warned there was “no simple solution” as it would be a time-consuming process.

“The industry needs reform, I think that’s quite clear from the work that we have been doing for the past number of months,” he told the Today with Sean O’Rourke programme on RTÉ Radio 1.

“What we hope to publish next month is a series of reforms that will speak to those different areas of the insurance market, and by setting out an ambitious timeline and a detailed plan of action, over time that will help see insurance premiums come down,” he said.

However, he warned the industry would not return to the days of “very, very cheap premiums”, which is not affordable for the industry.

Other recommendations include the proposed establishment of a “fully functioning integrated insurance fraud database for industry to detect patterns of fraud” and the “phase-out use of paper-based insurance discs following full introduction of a fully functioning real-time database of motor insurance”.

The CEO of Insurance Ireland, Kevin Thompson, said the body has recommendations of its own and cited legal fees and whiplash awards which are three times the amounts awarded in comparable cases in the UK, as issues that need to be addressed.

“We welcome today’s publication and would call upon the minister and his working group to implement these recommendations as a matter of priority, especially in relation to the level of awards.

“If this is done we believe the escalating cost of claims can be comprehensively addressed. As we have done throughout, Insurance Ireland will continue to work with the minister to ensure the volatility in the cost of claims is brought under control,” said Mr Thompson.

As part of its transparency recommendations, the working group has recommended insurers should be required to give motorists reasons for any increases on their yearly premiums.