Cabinet can’t halt high cost of motor insurance

Motor insurances premiums could continue to climb as the Government has admitted it is powerless to stop increases.

Publishing a report on the cost of motor insurance, junior finance minister Eoghan Murphy said it is not possible to place a cap on injury payouts such as whiplash, even though these awards are much higher here than in other countries.

Likewise the Government does not the power to limit rises in premiums which jumped by an average of 38.3% in the first half of last year according to CSO statistics.

Mr Murphy also warned that drivers will never again pay the lower prices that were charged in the past because “they weren’t affordable”, but said “we can come to a fairer premium for consumers if we work together to implement the actions in the report”.

The report of the Cost of Insurance Working Group has made 33 recommendations, including the establishment of a national claims information database by the middle of of 2018. This information will be collected by the Central Bank.

The establishment of a new fraud database before the end of 2018 is also among the recommendations. However, no budget has been allocated to this and it is still unclear how this information will be gathered and stored.

Mr Murphy said there was “no silver bullet” to solve the rising cost of motor insurance.

“It is going to take time to deliver, we do have a number of actions this year, but there will also be a number of actions taking place next year.

“It won’t be solved overnight, it’s going to require a number of stakeholders working together in terms of improving the market for the future.”

John McGuinness, the chair of the finance committee which conducted a separate inquiry into escalating motor insurance prices, said the recommendations do not go far enough.

“Telling Irish motorists that it is going to be two years before premiums reduce is not what they want to hear. They want to see insurance companies reigned in, in terms if the costs of premiums.”

The Fianna Fáil TD said the finance committee had made a number of suggestions that could have been implemented immediately.

“My disappointment is that there is no punch in it from Government. You have to deal with hard-nosed companies in a hard-nosed way.”

Also among the recommendations is the setting up of a personal injuries commission to provide guidance on compensation claims. The commission will be chaired by retired High Court judge Nicholas Kearns.

Mr Murphy said it had come to his attention that people are being awarded higher costs for injuries such as whiplash here than in other states and the commission would be tasked with providing information on this and suggestions on the grading of injuries. But he said the Government does not have the power to place a cap on claim payouts.

He said insurers would now have to explain to a driver why their insurance premium might have gone up: “To explain what exactly is behind that increase and that is where we talk about fairer premiums and getting to the root of that.”

Labour’s Seán Sherlock said there were still too many questions to be answered on motor insurance costs.

“If Insurance Ireland haven’t fully communicated the reason for large increases in premiums to consumers to date, then why would they do so now through this process?

“This is a kick to touch by the Government, where the actions are put on the long finger to the end of 2017 and into 2018.”

Insurance Ireland welcomed the report but stressed that priority must be given to tackling the rising cost of claims.

Insurance Ireland CEO Kevin Thompson said: “These recommendations include a personal injuries commission to review award levels, a review of the impact of legal fees, giving increased powers to the Injuries Board, examining international award levels and new initiatives to tackle insurance fraud.”