Time to rein in the insurers - Soaring cost for motorists

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

His decision comes in the wake of research from the Automobile Association which shows that despite fuel price reductions, car owners have not felt the savings in their pocket, as the cost of insuring their vehicles has soared.

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

That is all very well, yet in the past year alone, insurance premiums have jumped by 20%, the biggest one-year rise in over a decade, with no explanation from insurers for this.

Perhaps he and his fellow ministers should take a broader approach to the insurance industry. It is badly in need of proper supervision and regulation as the recent collapse of Setanta Insurance has shown. This was a company that left 75,000 policyholders high and dry, culminating in the High Court ruling last week that the Motor Insurance Bureau of Ireland has to cover 1,800 outstanding claims with an estimated liability of €90 million. That will undoubtedly mean even higher premiums. The only good news is that the collapse of Setanta was not of such an order as to prompt yet another insurance levy. How can it be that Setanta was allowed trade only in Ireland but be licensed in Malta? We all know what light-touch regulation of the banks led to. The insurance industry needs to be reined in in a similar fashion.