Following yesterday’s announcement by two of Ireland’s major motor insurers that they will no longer provide cover for cars beyond 15 years old AA Ireland is offering advice for affected motorists.
Firstly, we would urge any motorists who have 15 year old cars not to panic. There are still many other insurance providers who will cover your car, including The AA.
This is part of a bigger problem affecting the motor insurance industry as a whole. Prices are rising sharply for everyone: normal, standard risks are producing annual increases of up to 20%, while non-standard risks (including older cars) are prompting much higher premiums. New customers will also have fewer providers to choose from.
What can consumers do?
It’s time worn advice but do shop around. Even as prices go up there is still good and bad relative value to be had. Do please try the AA while you are at it.
Don’t look only at price. It obviously matters but look also at what’s included in the policy. Protected no claims discount or windscreen cover are benefits that are worth hanging on to.
Why is the price going up so much?
There are a few things going on, some of which are understandable and some that are less so. Traffic volumes have increased rapidly, thus resulting in more crashes and more exposure. There is also evidence to suggest that the cost of settling claims for injuries is growing. Fraud is a huge issue in the insurance industry, and one that has been tolerated for too long but is in fact driving up typical policies by at least €50. Levies are also included in policies to cover previous disasters such as the Quinn collapse, which resulted in a 5% increase.
However, another huge factor is that insurance was sold below cost for a number of years. Providers were fighting to keep their share of the profit but came up fruitless in under-writing terms. This activity is unsustainable and has resulted in a collective price hike.
Conor Faughnan, Director of Consumer Affairs at AA Ireland spoke to Newstalk’s Pat Kenny about this issue yesterday.
What does the AA want done about it?
There ought to be a much tougher regime when it comes to insurance provider’s tolerance of fraud. That includes how companies share data, a practice that will act as a preventative measure and quell fraud at its source. A regime that encompasses Garda detection, policing of the issue and court dealings with fraudsters in the aftermath would greatly stabilise the industry as a whole.
Address the rising cost of claims
The Injuries Board (injuriesboard.ie) has worked well for ten years at keeping legal and unnecessary costs out of the claims process. This requires a review due to the changing nature of the industry. Presently, courts are allowed to award higher pay-outs for personal injuries which results in the rise of unnecessary costs that are not part of the victim’s initial compensation.
Less crashes on Irish roads
Though it’s not exactly rocket science we know that when we invest in the number of roadside Gardaí, the number of collisions reduces. The evidence is more pointed in the case of fatalities and very serious injuries, but their presence also reduces the volume of smaller crashes as well.
In 2013 and 2014, The AA was warning that Gardaí numbers on the road were deteriorating unacceptably and we said this was the key reason why the number of crashes was increasing. To be fair that is a little better so far this year but we still do not have the level of enforcement that you see elsewhere.
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