Irish motorists can be forgiven for thinking that renewing their car insurance is akin to betting in a casino; the house always wins. Last year would appear to follow the established pattern where the industry comes up with a reason for why premiums had to rise. The culprit this time is the cost of crash repairs, which the industry says is the main driver of the 4 per cent increase in premiums.
What does the evidence say? According to the Central Statistics Office (CSO), the costs of maintenance and repair of personal transport equipment – which captures crash repairs – rose by 2.9 per cent last year – ahead of the consumer price index, which was up 2.2 per cent. However, this was hardly sufficient to explain a 4 per cent rise in insurance premiums.
Linking the CSO data through to the rise in insurance premiums is far from straightforward. Damage claims now account for over 50 percent of the cost of claims – up from around a third five years ago. However, according to Central Bank figures, much of this rise is due to the increasing costs of providing temporary replacement vehicles, rather than the cost of repairs to policy holders’ cars.
This rather aptly illustrates how, despite the plethora of statistics published each year, the workings of the industry remain surprisingly opaque. A long policy drive to try to lower premiums has improved things somewhat over many years, but the endless blame game over what is driving costs to motorists suggests there is more to be done. The ongoing row between the Irish Insurance Federation and the Law Society about the impact of legal costs is just part of the wider noise about the reasons behind the cost of insurance. The room for creative ambiguity as all sides put their case is substantial.
READ MORE
The annual furore about insurance premiums generates more heat than light. But it does remind the insurance industry that its arguments do not fully convince the public. It is no harm that this translates into more regulatory scrutiny and increased political pressure to cut premiums.
