No motor insurance cartel, says industry

The head of Insurance Ireland had insisted strongly the industry is absolutely not acting like a ‘cartel’.
No motor insurance cartel, says industry

Declan Jackson said rising car insurance premiums are being caused by soaring claims costs — despite a lack of evidence shown to the Oireachtas Finance Committee, which heavily criticised the industry.

On Thursday, the committee found that consumers have effectively been told to accept increases without explanation.

However, Mr Jackson denied claims by committee chairman John McGuinness that the industry engaged in “cartel-like behaviour”.

“I want to be very clear, in terms of accusations of a cartel, there is no cartel,” he said. “Those high level increases in premiums is not in the interests of the industry. It makes insurance less affordable which means people are less likely to take out insurance.

“Each year, the cost of claims is outstripping premiums. If you look at the Courts Service reports, they will show, in the Circuit Court, the average awards has gone from about €13,000 in 2009 to about €16,500 now.”

The committee recommended that data about insurance claims be collected by the CSO. It is hoped that extra transparency could boost competition.

The AA’s Conor Faughnan say there is no reason we should not know more about payouts.

“Data protection is often the first refuge of a scoundrel,” he said. “It is a great excuse and is chanted like a mantra as to why we can’t do something. But if you sold your house tomorrow we could find out what you got for it. I don’t think it is at all unreasonable for this information to be made available.”

Insurance companies were criticised by the report, which said a “closed mentality” and unwillingness to share data is a contributory factor to the recent rise in motor insurance premiums.

It may also hinder the entry of new operators into the “dysfunctional” Irish market, the report found. Tougher laws forcing insurance companies to reveal details of claims, awarding greater powers to the Personal Injuries Board, and tougher penalties for drivers caught speeding or on their mobile phone while driving are some of 71 key recommendations in the report.

The report found that, on average, premiums rose 37%, but in some cases premium have risen by 200% to 300%.

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

The report says it is unacceptable that the insurance industry publicly states that certain variables are behind steep rises in motor insurance, yet fails to publicly furnish supporting evidence.

Despite the criticism, Insurance Ireland said it welcomed the publication of the report and that it is committed to working to ensure issues in the Irish motor insurance market are resolved.

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