Government inaction is driving up car insurance prices - AA

The complacency of car insurance companies and Government inaction is driving up car insurance prices for Irish consumers, and if a few key changes were implemented, savings of hundreds of euro each year could be made, it has been claimed.

After a long period of stability, prices have risen by more than one third since January 2014.

The insurance industry has blamed the spike in premium prices on the high cost of awards in court, legal costs and fraud.

It has also pointed to the High Court judgment in relation to Setanta Insurance which left the industry to pick up a bill amounting to more than €100 million left behind after the company went out of business in 2014.

However, the AA says price increases are not inevitable and if measures were taken by both the industry and across multiple Government departments, consumers would stand to make large gains.

"Irish motorists don't just pay for insurance. They pay the real price of insurance plus the cost of carrying an unacceptable amount of fraud, waste and inefficiency," the AA's consumer director Conor Faughnan said.

“Prices are rising now but they should not need to – if a number of measures are taken to address some of the problems that motorists have been paying for for a long time.”

Key areas identified by the AA to tackle a growing crisis – which will cost Irish motorists more than €300 million in extra premium costs in 2016 – are industry transparency, the standardisation of legal awards, regulatory overhaul, and zero tolerance for fraud.

‘Uncertainty’

Mr Faughnan said that if the identified problems were tackled, “we can quickly create a stable and sustainable market for motor insurance.

“If they are not then we will continue to suffer uncertainty, market failures and unacceptably high prices.”

The AA has called on the Government to immediately establish a task force to address the reforms.

That group should include representatives from the insurance industry, the Departments of Justice, Transport and Finance, an Garda Síochána, and the legal industry.

“These areas cross many government functions and departments and other bodies, so it is not given the proper priority by any one agency,” Mr Faughnan said.

A key development which could save consumers money would be the rollout of an integrated information data service data hub,” Mr Faughnan said.

Share information

Such a system would allow insurers to share information on motor insurance applicants – such as no-claims information and details of penalty points – and would allow companies to detect fraudulent patterns of behaviour more quickly.

Mr Faughnan said it would also “make life simpler for honest motorists” by removing the need for them to obtain written proof of no claims discounts, which is currently a barrier to shopping around.

He said it was "disgraceful that insurers who operate a similar system in Northern Ireland have not managed to establish one here.

“As it stands when a consumer asks AA or any provider for cover they will be asked to send in a copy of their Statement of No Claims Discount.

“We are getting fakes in on a daily basis. We can detect them (we are large enough to have a fraud unit) but others may not.”

The AA has also called for the abolition of windscreen discs, as has been done in the UK, and their replacement with camera-based technology.

This has already seen a 42 per cent increase in fraud detections in the UK since it was done there in October of last year.

Mr Faughnan said paper discs were “a fraudster’s charter” and said they needed to be replaced with automatic number plate technology.

This is a system of cameras, either car-mounted, fixed, mobile or hand-held, that can read car registration numbers and check them against a database in real time.