Insurers ignore penalty points

Most insurance companies do not check if penalty information given to them by motorists seeking insurance is correct.

While more than 420,000 motorists, or roughly one in five of all licence holders, now have penalty points, the number of motorists admitting to their insurer that they have points is far lower.

The insurance industry is looking at ways in which penalty point information can be used to inform their risk-profiling of drivers. Privately, industry sources accept many motorists are underreporting their penalty points, not least because many insurers now impose higher premiums for drivers with six or more points.

While inaccurate information can potentially invalidate an insurance policy, cases where claims are being refused on the basis of inaccurate penalty point information are unheard of to date, according to industry sources.

Hibernian is the only insurer which is able to cross-check the penalty point information held on the National Driver File (NDF) to verify if a driver has points. The insurer must first obtain permission before checking the record.

To date, most insurers are adopting a "wait and see" approach to penalty points. A source within the sector said "we price based on risk. At the moment we are accumulating data and trying to see whether drivers with points are more dangerous."

"Once a pattern emerges, then using the penalty point data could be helpful. Then you will see more and more insurers looking for access to the National Driver File to check if what motorists are saying is correct."

The Irish Timesunderstands that at least two other insurers have held exploratory talks with the Department concerning access to the NDF for the purpose of validating whether the penalty point information supplied is correct.

Allianz is expected to seek access to the database within the next 12 months, after it has developed a system which will differentiate between "serious road safety infractions".

A Hibernian spokesman said drivers who allowed the company check their driver record could avail of discounts of up to 10 per cent if they had two or fewer penalty points, and 20 per cent for no points. However, drivers with five points or more have a loading applied to their insurance. Hibernian declined to say what proportion of its motor policy holders have points.

An Axa spokesman said fewer than 1 per cent of its motor policy holders receive a loading on their premium for admitting to penalty points. "We do not load policyholders who have six or less penalty points for speeding. However, we might load a driver who had points for careless driving. The reason for the penalty point is the most relevant issue from an underwriting perspective," he said.

He said responsibility to reveal penalty points remains with the driver: "The onus is on the policyholder to tell us of any material fact which might influence us in accepting a risk or setting a rate for that risk and this would include facts relating to penalty points. At present we do not have access to the penalty point data base."

FBD admits that "very few clients disclose this [penalty point] information at inception or renewal time". In a statement to this paper, the insurer said it did not check if the information supplied was correct. FBD imposes premium loadings on drivers with six or more penalty points.

A spokesman for Quinn Direct said all its motor insurance policy holders were asked whether they have penalty points as part of their application, but he declined to say what percentage of drivers admitted to having points.

Quinn Direct does not load premiums for drivers who admit to having points, but said this policy was subject to ongoing review. He was unable to say what percentage of its motor policy holders admitted to having points.

Details from Eagle Star were unavailable last night.