Motor insurance industry accused of cartel-like behaviour

The motor insurance industry has been accused of deliberately hiding key information from public view and engaging in cartel-like behaviour in a hard-hitting report on spiralling car insurance premiums.

The Joint Committee on Finance also accuses the Central Bank of standing idly by as consumers have been “thrown to the wolves” when it comes to premium pricing.

The report said that all witnesses to the committee – except the insurance industry’s three representatives – referred to the absence of data-sharing and the impediment this placed on getting to the root cause of motor insurance price increases.

It points out that 20 per cent of insurance claims are processed through the personal injuries assessment board (PIAB) and a further 10 per cent go through the courts.

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“For both of those roots there is full transparency and claims data is available in full view in the public domain however the remaining 70 per cent of claims are settled privately by insurers outside of both the PIAB and the courts service [and] there is no visibility or transparency whatsoever about these claims.

“It is as if they have disappeared into a black hole to remain ringfenced from interrogation and wider public scrutiny,” the report said.

Closed mentality

The committee said it was strongly of the opinion that the closed mentality and an unwillingness to share data freely was a contributory factor to the recent rise in motor insurance premiums and said it may also have hindered the entry entry of new operators into the market.

It questioned whether the insurance industry is "bona fide in undertaking to provide this information in future of its own accord".

The report also said that consumers have “effectively been told to accept these exorbitant increases without any explanation. The insurance industry says that it is the result of an increase in legal costs and compensation awards but will not supply supporting evidence for verification.

“At the same time the Competition and Consumer Protection Commission states that its remit is economy wide and is limited to enforcement of competition law that is of little comfort to suffering motorists who feel exploited and abandoned.”

The report continued: “It would appear to the committee that the Central Bank has abrogated responsibility.”

Recommendations

The report’s recommendations include:

* An end to the “closed shop” mentality of the industry and calls for full transparency in relation to claims information;

* The Central Statistics Office should be given a statutory role in collating insurance data;

* Consumers should be given detailed cost information in renewal notices;

* More pro-active regulation of the industry by the Central Bank with a greater focus on consumer protection;

* The insurance companies should be compelled to inform the consumer whether they have taken into account the mandatory medical assessments for over-70s drivers when calculating insurance premiums for this cohort;

* Greater powers for the PIAB, with the objective of increasing the number of claims cases settled by PIAB, thereby reduces claims costs generally;

* The Book of Quantum (guidelines for payouts for injuries) should be reviewed and updated on a regular basis.

‘Unfairness rampant’

Committee chairman John McGuinness said: “Spiralling motor insurance premiums is making insurance unaffordable for many people and adding also to business costs.

“This cross-party report offers 71 recommendations which we believe can contribute significantly to addressing the lack of transparency, as well as the unfairness that is rampant in the market.

“We are calling for competition to be encouraged and for fundamental data-sharing to be mandatory in the insurance sector. The judiciary should also consistently use the revised Book of Quantum.

“We share consumers’ frustration at the lack of fairness in the pricing regime and we are urging the Cost of Insurance Working Group in the Department of Finance – chaired by Mr Eoghan Murphy TD, Minister of State – to work to implement some or all of our recommendations.”