Michael Noonan orders insurance review as premiums soar

Insurance industry representatives have claimed there is almost a “cottage industry” in whiplash claims in Ireland that is pushing up the price of premiums, Tánaiste Joan Burton has said.

She was speaking in the Dáil as Fianna Fáil pressed the Government to re-establish the Motor Insurance Advisory Board, which had contributed to lower premiums.

Industry projections predict a 55 per cent rise in premiums over two years, after increases of up to 30 per cent last year.

Minister for Finance Michael Noonan said earlier he had begun a review of the insurance sector, with a particular emphasis on motor insurance.

He ruled out re-establishing the advisory board “at this time”, but said the review of the insurance sector, with a particular focus on the motor industry, would be completed within months. And while neither he nor the Central Bank could direct pricing policy “this does not preclude the Government from introducing measures” that could facilitate a reduction in claims costs.

Market reversals

Mr Noonan said recent competition between insurance companies on premiums had been subsidised by investment income, but there were now reversals in investment markets.

Fianna Fáil finance spokesman Michael McGrath said during Dáil finance questions that somebody who paid a premium of €400 in 2014 would probably pay €650 to €700 after this year and this was unsustainable, with young drivers and motorists with older cars being penalised most.

He said seven out of 10 claims were settled out of court and there was a lack of transparency around those settlements and a lack of consistency in court awards.

Mr Noonan said the frequency of claims and their size had increased. The “claims environment is volatile”.

Later, at Leaders' Questions, Fianna Fáil's Barry Cowen said while this may have contributed to costs, it did not warrant "a possible 55 per cent increase in insurances premiums over a two-year period".

The Tánaiste said that at a meeting earlier this week between Ministers and the insurance sector on flood insurance, one industry representative said “there is almost a cottage industry in whiplash claims in Ireland at the moment”. She said there was no “cheap, quick-fix solution” that would result in a drop in premiums, but the Government was engaged in “intense and detailed dialogue with the insurance industry”.