As our report today shows, the worst example of insurance premiums gone mad concerns a Limerick businessman who has seen the total cost of insuring his eight taxis rise by 700% in a year.
The Government needs to step up to the mark and recognise that there is a crisis in the industry here and that hundreds of thousands of motorists are being quoted astronomical premiums.
The best way of doing this would be to resurrect the Motor Insurance Advisory Board, to bring insurers to their senses.
Something also needs to be done about allowing motor insurers to operate in the Irish market if they are subject only to foreign regulation.
Under EU rules, insurance companies that are regulated in one member state can do business in all others. The problem is that not all EU states have the same type of regulation. In 2014 Setanta, which was regulated in Malta, collapsed leaving unpaid claims of €90m.
Setanta is now in liquidation and there does not seem to have been any industry-wide fund in Malta to deal with such an event. The result is that the Irish insurance industry has had to pick up the tab and has — as usual — passed the bill onto the consumer, resulting in higher premiums. Last month, Gibraltar-regulated Enterprise Insurance went under. Its business in Ireland was handled by Wrightway Underwriting, which is owned by Zurich.
Wrightway customers were luckier than most, as they were refunded the outstanding amount on their policies so they could buy replacement cover.
The whole situation harks back to the scenario in the late 1990s, which led to the setting up of the Motor Insurance Advisory Board in 1998 and which helped greatly in bringing down the soaring cost of motor insurance premiums and could do so again.
At the time, the insurance industry blamed rising claims and legal costs for the hike in premiums and that argument proved very persuasive, leading the government of the day to set up the Personal Injuries Board, which has seen legal costs fall dramatically.
Predictably, the insurance industry is blaming a rise in court awards for the outrageous increase in motor insurance premiums, pointing to a 21% rise in Circuit Court awards last year. The Circuit Court jurisdiction was increased in 2004, allowing higher awards there. The flipside of that is fewer High Court claims, but the insurance industry ignores this, and the fact that its costs overall have actually fallen.
In any event, a 21% hike in awards does not account for some premiums more than doubling in the space of a year. That can only be explained by profiteering.
Only the Government has the power to bring the industry to heel. A new advisory board would be a good start.