Motor insurance woes set to drive many of us round the bend

The Central Bank of Ireland yesterday brought us further evidence of the woes of the Irish motor insurance industry.

Its Insurance Statistics 2015 report shows that the 21 listed insurers (some of whom actually carry out little or no business here) made aggregate underwriting losses last year of €273 million. This was 38 per cent higher than in 2014.

The combined investment income for the year declined by 31 per cent to €51.8 million, leaving them with an overall loss for the period of €221.6 million.

Read it and weep because if your policy is due to be renewed in the near future, you’re most likely going to be whacked with a big double-digit rise in the premium.

Even if you’ve never had a claim, have no penalty points, faithfully service your car every year and polish it daily and keep it in a garage with a Rottweiler on duty for security.

Teenager

And if you’re a teenager looking for your first insurance or hoping to get cover for a car older than 15 years that you’ve just bought, then you’ll probably have to rob a bank to pay for it.

Latest figures from the Central Statistics Office show that motor car premiums rose by 28 per cent year-on-year in August.

All of the big name insurance brands suffered last year. Irish-owned FBD was worst hit with an underwriting loss of almost €102 million. Investment income of about €9 million softened the blow slightly to bring the deficit for the year to just below €93 million.

A lot has changed at FBD in the meantime, with chief executive and former Central Bank executive Fiona Muldoon instituting a number of changes to restructure the business, including premium rises.

Underwriting losses incurred by Axa and Allianz topped €40 million while AIG and British insurer RSA each had deficits of around €26 million.

Aviva Ireland stood out in the Central Bank’s data, with an underwriting profit of €5.7 million last year, the result of a significant restructuring of the business in recent years.

Contrast these results with 2009, when the Irish economy began to nosedive as the banking sector went into meltdown.

In that year, the insurers made an aggregate underwriting loss of €6.5 million but healthy investment income of €138.3 million left them with a combined profit for the year of just shy of €132 million. Heady days.

Sharp increases

The reasons for the sharp increases in insurance costs have been well aired of late but trying to make sense of it all is akin to tackling a Rubik’s Cube for the first time. So many sides to the problem and so many moving parts.

A new book of quantum (which provides a general guide to the amounts that might be awarded) will be published by the Injuries Board in the next couple of weeks. It hasn’t been updated for more than a decade and the idea is to provide a better benchmark for judges as they ponder awards.

The insurance industry would also like it to reflect the level of awards for similar injuries in other jurisdictions. But this seems unlikely.

Others would argue that, in the interests of transparency, insurers should publish details of their out-of-court settlements. Again, this seems unlikely.

Minister for State for financial services Eoghan Murphy has established a interdepartmental working group to come up with proposals on what policy measures the Government might be able to take to help alleviate the situation.

It is due to produce an interim report in the next few weeks with a final report due by the year end.

Murphy has spent the last number of days in Asia, launching the new Irish financial services brand in various countries.

He is said to be keen to put some meaningful insurance reforms together, which could yield a political dividend given that this is such a hot topic with the public.

The Dublin Bay South TD was a member of the Oireachtas banking inquiry and a central player in compiling its final report and recommendations at the eleventh hour.

He found it a frustrating experience and we can only hope his involvement in trying to resolve the motor insurance conundrum yields a more satisfying outcome. Otherwise, we’ll be paying through the nose for years to come.

Twitter: @CiaranHancock1