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Rising Motor Insurance Premiums

Why is Motor Insurance prices Increasing

Car insurance

Motor Insurances Premiums on the rise

I am sure by now you know the cost of motor insurance is sky rocking. We are all wondering why. According to Aviva the reasons below are a contributing factor. 

Here we will look at these reasons and advice what you can and should do when you get your renewal in. 

The reasons Aviva say Motor insurances prices are increasing are; 

Excessive Award Levels

  • Ireland has the highest claim award levels in Europe. The average whiplash payout is €15,000 (Spain / Italy is €3,000, UK is €5,000)1.
  • 80% of motor injury claims in Ireland are related to whiplash2 (3% in France3). This adds on average, €1304 to the cost of your motor premium.
  • The excessive nature of award levels in Ireland is increasing the incentive to commit insurance fraud, which costs the Motor Insurance industry in excess of €100m per annum2.

Inconsistent Award Levels

  • Court award levels for injury claims continue to rise year on year (34% increase in High Court award levels from 2013 to 20145).
  • Most European countries have an appropriate and consistent Book of Quantum, which sets out the level of award that should be paid for a given injury type. Ireland’s Book of Quantum is outdated and not used by the Courts, hence award levels here are hugely inconsistent. This makes it very difficult for insurance companies to price their policies.

Excessive Legal Costs

  • 60% of the costs of cases settled through the courts are for legal fees2.
  • The Injuries Board, which was set up by the Government in 2004 to deal with personal injury claims without the need for legal representation, needs greater powers. 90% of Injury Board claimants now attend with legal representation, while 40% of Injury Board awards are rejected and proceed to court2.
  • The reforms recommended by the Troika committee, as a condition of Ireland’s bailout, including a reduction in legal fees, have yet to be implemented.

Regulation of Insurance Providers

  • Quinn Insurance traded recklessly, and it is estimated that its collapse will ultimately cost the Irish taxpayer in excess of €1bn (2% levy on your motor premium2).
  • Enterprise Insurance, which sold insurance products in Ireland while being prudentially regulated out of Gibraltar, is currently being wound up due to insolvency.
  • This follows the liquidation of Setanta Insurance, with outstanding claims liabilities of over €90m2. The High Court has deemed the Motor Insurance Bureau of Ireland (MIBI – representing the Irish insurance industry) liable for the claims outstanding against Setanta.
  • In no other industry would companies be asked to bail out a competitor who becomes insolvent through reckless trading.

Advice

When you get your renewal, shop around by using an independent broker to shop the market for you, Don’t just accept what your current provider is offering.
We do not provide this service but we are happy to recommend Cavanagh Hooper Dolan Insurances ltd, who do provide independent advice and will shop around to find you the best possible price.  

You can call Cavanagh Hooper Dolan Insurances on
Sligo - Tel: 071 91 44333     Letterkenny - Tel: 074 91 77500     Inishowen - Tel: 074 93 81100

Warning:

As always make sure you are pricing like for like. Some companies are offering cheaper quotes but are reducing the cover. The devil is in the details or when it comes to insurance the devil is in the small print. You will only know whether you have a good policy or not when bad things happen and you make a claim. 

If you have any questions on insurances and or financial planning you can call us on 074 910 3938 or  Email us
We are here to help.

References from above

  1. Insurance Ireland – ‘Driving Change – Measures to stabilise Motor Claims – 2015’.
  2. Insurance Ireland Press Release 15/09/2015.
  3. Insurance Ireland Media Briefing pack 15/09/2015.
  4. Whiplash cost per policy of c. €130 calculated as follows - 33%1 of total industry motor claims €979m6 divided by 2.5m licenced vehicles on the road (Dept of Transport Tourism & Sport – Bulletin of Vehicle & Driver Statistics - August 13th 2015).
  5. Court Services Annual report 2014.
  6. Insurance Ireland 2014 Factfile report (page 20).
  7. Irish Broker Magazine Article - Feb 2016.

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