Transport Minister rules out intervention as car insurance costs soar

Transport Minister Paschal Donohoe has ruled out intervening to prevent further rises in the cost of motor insurance.

New figures show the cost of insuring a car has risen by around a fifth in the past year alone.

Minister Donohoe said that the best his Department can do to tackle spiralling costs is to make roads safer.

New research from the AA shows that despite major price reductions at the petrol pump, car owners

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In the past year alone, insurance premiums have jumped by 20%.

The Transport Minister said that the rising cost of insurance is something his department is conscious of - but was asked whether the Government would set up a Motor Insurance Advisory Board, he ruled it out.

Minister Donohoe also said that efforts were underway to ensure that insurance firms had access to drivers' penalty points.

Motoring experts at the AA said fuel costs at the pumps have come down over the last 12 months but now the average car owner can expect to see their premiums soar by about 20%.

It is the biggest one-year rise in insurance costs for well over a decade, the agency’s consumer affairs director Conor Faughnan said.

“It marks a big change in the market, with insurers nervous about rising claims and about improving their reserves,” he said.

“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.”

Mr Faughnan blamed the hike on a price war among insurers which was now in reverse, the level of fraudulent claims and the increase in payouts available in the courts compared with the injuries board.

The AA said its annual survey showed the cost of running a family car for the year is now at €10,593.60. It is down only €17.60 compared to last year.

It put the average cost of a litre of petrol at 145.3 cent, 7% lower than 12 months ago.

The AA said a typical motorist would be saving around €144 a year if fuel prices stay at that mark.

It also flagged that 60% of the cost of fuel is excise duty imposed by the Government.

The AA’s price for running the average car is based on analysis of vehicles in each tax band and costs such as fuel, insurance, servicing, depreciation and replacing parts including tyres.

It is based on a car being bought new and kept for eight years with 16,000km on the clock each year.

Thresholds for claims relating to motor accidents were increased for the courts in 2014.

The Circuit Courts can order payouts of up to €60,000 compared with the previous limit of €37,000 while the District Courts can sanction a claim of €15,000.

Mr Faughnan questioned why courts were being offered room to settle more claims, which in turn increases legal fees and costs to insurance companies which are then passed on to consumers.

“I see no evidence to suggest this will be good for the consumer. I see no evidence to suggest this will be good for the settlement of claims. I see no evidence to suggest this will reduce the cost of motoring,” he said.

“But if there’s one group it will benefit that’s the legal profession.”