Fianna Fáil Spokesperson on Finance Michael McGrath has called for the re-instituting of the Motor Insurance Advisory Board to deal with soaring motor insurance premiums.
According to CSO data, motor premiums have risen by approximately 24 per cent over the past year with insurers warning of further increases of up to 20 per cent in 2016. These statistics are despite measures introduced to improve road safety and reduce accidents.
Deputy McGrath commented, “The benefits, which were achieved in the period up to 2013, in terms of reduced motor premiums are now evaporating. This is putting a squeeze on family finances and putting businesses under increased cost pressure. Unfortunately, the situation has been met with indifference from the Government with the Minister for Finance seemingly only concerned with solvency issues relating to insurance firms. It appears no one in government is concerned with the interests of consumers and businesses when it comes to insurance premiums.
“If we think back to the establishment of the Motor Insurance Advisory Board (MIAB) in 1998, it came at a time of significant economic challenge and a period when motor insurance rates had increased by 48% over seven years. MIAB recommendations had the effect of reducing insurance costs by 40 per cent in real terms between 2002 and 2013.
“Establishing the Personal Injuries Assessment Board was one of the 67 recommendations of MIAB. It takes an average of 9,000 personal injuries claims out of the courts systems. We are now allowing these hard won gains to be frittered away.
“We cannot rely simply on assertions from insurance companies to justify increases. I am proposing a number of measures alongside a re-constituting of the Motor Insurance Assessment Board which I believe should be considered to tackle soaring insurance costs including:
“Full transparency on profitability of industry: MIAB found in the late 1990s that profits relative to premium for Irish insurers were considerably higher than for comparable firms in the UK. A similar examination of profitability is needed now. This would allow an assessment of the validity of industry claim that premiums are rising because personal injury awards are up to 3 times higher in Ireland than the UK. Many commentators suspect that the real reason for price hikes is a complete lack of transparency as regards the true profitability of insurance firms and a desire on the part of insurers to sneak in price rises on the back of requirements to hold greater reserves under EU rules.
“Improved regulation model: The Central Bank of Ireland should be in a position to deny an insurance firm permission to operate in the Irish market if it believes that it is registering in another jurisdiction solely for purposes of availing of a more lenient regulatory regime. Unsustainable price competition is not in anyone’s interest and ultimately leads to a weaker overall market.
“Action on exaggerated claims: Those sections of the Civil Liability & Courts Act 2004 which were never progressed to deal with exaggerated claims should now be implemented.
“Consistency in Court awards: The monetary limits of the courts were increased in February 2014 with the maximum for the Circuit Court increased to €60,000 for personal injuries. Greater on the job training is required for members of the judiciary to ensure that comparable cases are treated in a similar manner.
“Clear distinction between MIBI and ICF: The Motor Insurance Bureau of Ireland (MIBI) is a fund to deal with the claims by victims of uninsured / unidentified drivers. The Insurance Compensation Fund (ICF) is funded pay a 2% levy on all non-life assurance policies to cover claims where an insurance company collapses. In the case of Setanta Insurance, the failure to have clearly established rules as to which entity is liable has led to ongoing delays in meeting claims. This needs to be resolved by legislation in order to protect consumer interests.”