Have you noticed an increase in your car insurance premium?
Well CSO figures suggest that Car Insurance prices are now up 24% across the industry compared with August 2014.
There are some reasons why:
1. The insurance industry has seen some losses in recent years
Following a period of intense competition, insurance providers lost a collective €235m in 2013 on private motor insurance which has forced insurers to increase their premiums in an effort to return to profitability with a price correction across the market. Insurers are finding it very difficult to offer prices that appeal to consumers as yields are at their lowest level ever.
2. Fatalities and injuries are on the rise
Insurers are losing money on motor policies due to higher levels of road fatalities, more collision and injury claims. Statistics on 2014 published by the Road Safety Authority show a 21% rise in the number of road traffic fatalities from 2012 to 2014. Carjacking and hijacking increased by 75% and vehicle theft increased by 5% for quarter one of 2015 compared to the same period of 2014.
As well as that, in Ireland, according to Michael Horan from Insurance Ireland, the most common motor insurance claim is for Whiplash, 3% of motor claims in France for example, are for whiplash where as in Ireland that figure is 80%. The uncanny thing is that the average whiplash pay-out here is €15,000 compared to about €5,000 in the UK based on 2014 figures.
3. Fraud continues to feature
“Insurance fraud costs insurance companies in Ireland an estimated €200 million annually which ends up being paid by honest policyholders” (InsuranceConfidential.ie). Kevin Thompson of Insurance Ireland said insurance fraud adds an average of €50 per year to an average customer’s policy.
Would you believe that there are at least six insurance fraud rings operating around Ireland! The independent reported that “staged accidents are now so common that insurance fraud adds almost €50 to the average driver’s premium”. These fraud rings stage the accidents by having several people involved and then turn up in A&Es complaining of neck injuries and other soft-tissue injuries. The Injury Board report seen the volume of claims rise so much that the total of claims in 2014 was €72.4 million more than 2011.
4. Legal costs
The PIAB (Personal Injuries Assessment Board) was introduced in 2003 to reduce the legal costs involved in handling claims and basically to reduce the need for lawyers in insurance cases. In essence, the plan was good as it introduced fairness but it didn’t happen.
The independent report that “90pc of those making a personal injuries claim before the Injuries Board are legally represented… Further complicating matters is that 40pc of all Injury Board awards are then appealed to the courts… As a result, legal fees still account for 46pc of total claims costs.”
No insurer can afford to price insurance in the long term which provides no profit, so prices are increasing. Some car insurance customers have noticed increases in their premiums above 24% and some below. Our prices vary with age, location, car type amongst other factors.