Committee’s report on motor insurance may be just the start

Reforms of Motor Insurance Costs, the Political Response: Part One. This might have been an apt title for the report published yesterday by the Oireachtas Finance committee.

The detailed 61-page report includes no fewer than 71 recommendations on measures that the members believe should be implemented to tackle the rising costs of motor insurance.

Rising motor premiums have become a real issue for motorists, even those with perfect driving records, vehicles that are in good order, and a clean slate on claims. This doesn’t make sense, as the report notes.

In the year to July 2016, premiums rose 38 per cent, while the committee found anecdotal evidence of increases of up to 300 per cent being sought.

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It is ironic that this is the one insurance that is mandatory by law yet many motorists find it difficult to secure a quote, never mind a policy.

The committee zoned in on the lack of transparency for out-of-court settlements by insurers. Some 70 per cent of all claims are settled in this fashion but no data is produced by the industry.

By contrast, the outcome of court rulings is in the public domain (that is 10 per cent of cases), along with settlements agreed via the Personal Injuries Assessment Board (20 per cent of cases).

The committee suggests that this lack of data might be hindering the entry of new operators into the Irish market, and recommended that this be put on a statutory footing, with the CSO charged with collating and publishing information on claims.

Legal route

The industry fears that this might only encourage more people to go the legal route, rather than settling early or via PIAB, thereby pushing up settlement and legal costs.

The report also recommends that consumers be given detailed cost information in renewal notices, that PIAB be given greater powers, and that the book of quantum, which provides guidelines for payouts, be updated on a regular basis.

It also recommends a strengthening of road-safety measures and enforcement.

These are all sensible measures but are unlikely to move the dial, according to the industry. Insurers want action taken on whiplash claims, which account for about 80 per cent of their settlements.

The report also highlighted allegations of “cartel-like behaviour” that emerged from its work.

As a couple of industry executives noted to me, if there is a cartel in operation it must be the “dumbest” in the world.

Motor insurers in Ireland made an aggregate underwriting loss of €273 million last year, according to data published by the Central Bank of Ireland in September. These losses were 38 per cent higher than in the previous year.

Either way, the Competition and Consumer Protection Commission is currently investigating the industry.

Thunder

Much work went into compiling the report and committee chairman John McGuinness insisted that it would “not gather dust on some shelf”.

However, the reality is that their thunder will most likely be stolen by the Minister for Financial Services Eoghan Murphy, who is set to present his own report – part two of the political response – next month to Minister for Finance Michael Noonan.

His inter-departmental working group published more than 40 “emerging recommendations” on October 28th. Murphy’s intention is to include timelines for recommendations to be acted upon, along with the names of those who will be responsible for making them happen.

None of this matters to the public, who just want some relief from soaring premiums.

The political will is there so this should happen, although it might be a year or two before motorists begin to see the benefits.