Insurance premiums must fall, says report

INSURANCE premiums must drop by a third within two years to ensure value for money, a high powered Dáil body has concluded.

A report released by the Joint Committee on Enterprise and Small Business yesterday found that Irish consumers are effectively being charged 30% more than they should be for their insurance.

“The Joint Committee will not be happy to see prices merely stabilise . . . but wants significant reductions to at least the levels applying some years ago,” the report demanded.

The highly critical study also accuses the insurance trade, which is the focus of a Competition Authority investigation, of failing to offer an adequate explanation for why consumers are paying so much.

As motor insurance profits topped €160 million last week, the report rejected the industry’s arguments that price increases were entirely due to difficult market conditions and instead said there was evidence of possible cartel activity in the Irish and European insurance market.

Committee chairman Donie Cassidy called for an urgent overhaul of the entire industry.

“Our people on the ground are suffering. Everyone is suffering because of the enormous amounts of insurance they are being charged,” he said.

Launching yesterday’s report, committee members expressed particular concern over what they saw as misleading presentations by the insurance industry.

Labour’s Brendan Howlin said he found it difficult to believe the arguments of the insurance industry, given the high motor insurance profits last year.

“It is disingenuous, to put it mildly, given what they told the committee. It is very difficult to believe that they had no idea when they were before us that their end of year figures would be so much in profit,” he said.

However, Martin Long of the Irish Insurance Federation (IIF) defended the industry and pointed to a €50m loss in business and liability insurance last year.

“The report is welcome but we need the roll-out of relevant legislation and we have also yet to see the promised Garda traffic corps. For the most part, there has been no movement on it,” he said.

Many of the 40 recommendations contained in yesterday’s report echo those put forward by the Motor Insurance Advisory Board in a report released in April.

Proposed measures include the scrapping of the Government 2% levy on premiums, a Government inquiry into legal fees, legislation to regulate driving schools and the early establishment of a dedicated traffic corps.

The committee called for the enactment of the required legislation as soon as possible.

The Civil Liability and Courts Bill, dealing with insurance fraud, and the Personal Injuries Assessment Board Bill, establishing an alternative way of settling claims, are both due to pass through the Dáil in the Autumn.