Soaring insurance costs: Government must do more

INSURANCE costs, especially motoring insurance costs, have risen inordinately. Car insurance, in many multiples of the rate of inflation, has risen by around 35% in two years. Some drivers have had to cope with even greater increases.

There are many factors feeding into this unwelcome spiral. Levies to cover losses made by Quinn Insurance and Setanta play a part and are another example of the financial services sector socialising losses but privatising profits. Poor regulation, if any at all, adds to these costs. It has also been argued that fraudulent claims add €50 to every premium. According to the AA “we pay for the real cost of insurance, and then ... we pay for unacceptable amounts of fraud, waste and inefficiency in the system”.

Two of the drivers of this barrier to competitiveness are high injury awards and legal fees. Our compensation awards are uniquely generous and Government needs to impose a benchmarking exercise to cut costs. Legal fees have been a problem for this society and economy for many years. This was recognised by the troika, who demanded reform but to no avail. The shameless — and shameful — capitulation of the last government to legal profession lobbying over the Legal Services Bill was a betrayal of the majority of citizens to indulge a powerful sectional interest. Sadly, this refusal to confront power is at the root of escalating insurance costs and many of the other difficulties facing this society.