Motorists gear up for cheaper insurance

MOTORISTS can look forward to cheaper insurance premiums, thanks to the introduction of penalty points and planned government reforms.

Some of the biggest insurance firms in the country yesterday said they expected a reduction in premiums if improvements in the insurance market continued.

Tánaiste Mary Harney also said a number of reforms were on the way which should push premiums even lower, including:

A guarantee that firms will cut the cost of insurance if they are allowed access to the State’s penalty points database.

A drive to increase greater competition in the sector by attracting major international insurance firms into the country.

New laws to crack down on bogus claims by making it an offence for anyone to make a fraudulent claim.

Insurance firms have cut their losses dramatically since the introduction of penalty points, with FBD yesterday announcing a 55% drop in losses last year, from €22m to €10m.

Deputy chief executive Philip Fitzsimons said: “It’s quite a considerable improvement. It appears the industry is benefiting from some of the initiatives the Government took in terms of penalty points.

"The incidence of claims is down, particularly in the latter half of 2002. If that trend continues, one would realistically expect downward pressure on premiums.”

Mr Fitzsimons said they may reward drivers who are a lower risk, and increasing rates for motorists who are a higher risk.

Hibernia yesterday said it was considering freezing rates at 2002 levels, while Axa said the signals were positive for lower premiums.

Martin Long of the Insurance Industry Federation (IIF) said reforms like access to the penalty points database and the Personal Injuries Assessment Board, would “feed positively into premiums.”

He said the cost of claims was the main driver behind motor insurance, particularly the level of compensation awards and the associated legal costs.

Ms Harney yesterday said she was aware that firms were seeking access to the national drivers’ database, but insisted this would only happen if the information was used to drive down insurance costs.

She also confirmed that legislation will be introduced later in the year which would allow the State to pursue anyone who makes a fraudulent claim.

The legislation will oblige claimants to sign an affidavit, which would leave them open to prosecution if their claim turns out to be bogus.

The Tánaiste said she would seek to attract more major international firms into the country as part of a drive to bring greater choice and competition.