Jill Kerby

INSURANCE RAIDS UNLIKELY TO PAY OFF ANYTIME SOON

Last week’s raids by the EU and Irish competition authority investigators on a number of insurance company offices, brokers and Insurance Ireland, the trade organisation for the industry, may be the first step to uncovering what has been suspected price fixing here.

The sharp rise in motor premiums – 38.8% in the year to June 2016 and by as much as 70% over the past three years - has been a source of considerable anger by consumers, especially those with clean driving records. Advanced price ‘signalling’ – where insurers have allegedly announced, in tandem, that there will be upcoming increases is one of the causes being cited for the surprise inspection.

There have also been questions about the way consumer claims records have been shared within the industry and how this may have closed off access to the market to outside competition, as well as a suggestion that false information was reportedly given to the Central Bank, which regulates the sector.

All of this may have been sufficient cause for the joint action, but the EU Commission quickly noted after the raids that no charges have been laid against any insurer or insurance body and that they have no legal deadline to complete their inquiries. 

In other words, don’t hold your breath. Premiums are not about to fall back to 2013 levels. If you’re a young driver, there is no magic solution at hand if you need affordable cover, and if you are a returned migrant, that clean driving record (and no claims bonuses) that you still have after a few years in Australia or the States is not going to be automatically recognised now that you’re back home.

These are just three common complaints about motor insurance but the headline catching raids are only ‘optics’. The competition authorities have been aware of pricing and competition problems for several years but, frankly, have done very little to address them.

These include agencies like the Competition and Consumer Protection Agency, the EU Competition Directorate, the Central Bank, which oversees the insurance companies and the Insurance Compensation Fund); Injuries Board Ireland, whose presence is supposed to help reduce the costs involved in motor injury claims, and even the Gardai whose job it is to enforce the traffic codes, but too often have insufficient information about the drivers they stop to fully access the risk they may pose.

Until issues like alleged price setting and other cartel-like activities; the compensation scheme (which is being boosted); better use of insurance databases and driver insurance records; tackling fraud and payments of excessive injury settlements, the cost of not having an efficient motor insurance system in place will continue to be passed onto drivers in the form of higher insurance premiums.

Offers of cheap insurance – a door-to-door motor cover scam with flat rate quotes of just €300 has been uncovered recently – should be avoided, and reported to the Gardai.  As always, if something seems to good to be true…that’s because, it is.

So what should you do until then to keep your insurance costs affordable? Whatever you do, ignore offers from door-to-door con artists of flat rate insurance quotations. (If a deal looks too good to be true, it’s because it’s a scam, warn the Gardai.)

Here are some cost saving suggestions, but forewarned is forearmed: driving in Ireland is expensive and will be for some time. 

-       Always shop around when your policy hits its renewal date. Unless you have a trusted, independent broker – a very good idea - then methodically call the insurance companies for best quotes, terms and conditions.

-       Pay by lump sum, not monthly payments. Insurers charge a hefty premium for paying by instalments.

-       Check that you include only the cover you need – comprehensive insurance for an old car is not good value, but it may be worth paying a little more to protect your no-claims bonus. It will prevent your premium jumping sharply the next year if you have a minor or major accident.

-       The larger, newer and more expensive the car, the bigger the insurance premium. (Vintage cars, even a Rolls Royce, carry very low insurance premiums but can cost quite a lot to repair ordinary wear and tear problems.)

-       Consider increasing your excess payment - the amount you will pay if you have a claim. The higher the excess, the lower the premium.

-       Do you have an indoor garage?  Off-street parking? A good car alarm? These will all help reduce your premium.

-       Mature drivers will pay less than younger ones. Some insurers will even charge less if you include another mature, named driver on the policy

-       Don’t forget to disclose previous claims, etc. If you have an accident and a previous claims record that you didn’t disclose the claim will be rejected.

-       Group scheme members (like trade unions, credit unions, sports clubs) should also shop around. Those high commission schemes are not always best value for every driver.

Please send your queries to Jill c/o this paper or by email: jill@jillkerby.ie

(The TAB Guide to Money Pensions & Tax 2017 is available in all good bookshop, €9.99. See www.tab.ie for ebook edition.)