If you have recently insured or are currently insuring a motor vehicle in Ireland, you will more than likely have noticed an increase in your premium of anywhere between 10% and 100%. You may also have noticed that insurers are less likely to offer cover outside of their tight underwriting criteria (if your vehicle is over 10 years old, for example, you may find it difficult to get a quotation).
So why has the cost of motor insurance cover increased by so much?
- Increase in legal fee costs:A mixture of higher court awards (which in turn have higher legal costs attached), more claims been settled away from the PIAB (who did a good job of limiting legal fees attached to a claim) and an expectation of a higher percentage of award by claimants, has helped to drive up the overall costs of claims. Judicial awards have also been riddled with inconsistency, which makes it difficult for insurers to a rate a risk properly.
- Fraud and uninsured vehicles. Uninsured driving and fraudulent claims are still a major issue in Ireland. Uninsured driving accidents are costing each insured driver on average of €50 per policy.
- Under rating of premiums by insurers. The insurance industry have to take a fair share of the blame for the current state of the market. For too long, insurers (mostly on the direct side) chased market share, rather than correctly rating insurance premiums. This meant that premiums were too low for too long and didn’t reflect the risk attached. This, along with under allowing for the long term costs of claims and new solvency 2 provisions (which meant an insurer had to have more money set aside for claims), meant that insurers have had to increase their rates sharply instead of over a period of time.
- Poor investment returns. In the past, insurers were able to make up claim losses by investing group premiums into the investment market. Interest rates and bond yields are historically low at the minute, which means insurers need to plug the gap in their account sheets somewhere else.
- More traffic on the roads = more accidents. As the economy has recovered, so has the volume of traffic on the roads. Law of averages would suggest that the more traffic on the road, the more accidents will occur.
- MIBI and Setanta failure. As well as picking up the costs of uninsured drivers, the Motor Insurance Bureau of Ireland (MIBI) has recently been directed to pay out the costs of collapsed insurer Setanta. If this judgment is ratified, every insurer in the Irish market will have to bail out any other insurer that collapses. The MIBI is funded by the insurance industry, who are in turn funded by you the client.
Whilst we cannot guarantee a cheap quotation, we will check the available market for you (we deal with more than 20 insurers and underwriters) call us on 0818 919699 and we will do all we can to help.