Motor Insurance premiums down 3% since beginning of 2011

The average price of a motor insurance policy in Ireland dropped from €567 to €549 since the beginning of 2011 representing a decrease of 3% according to the results of the new AA Irish Motor Insurance Premium Index.

The news of this small but welcome reduction comes from a new quarterly motor insurance index launched by AA Insurance. The AA is one of Ireland’s largest insurers with over 200,000 customers. The AA Index has been tracking a fixed basket of 200 identical motor insurance risks, representative of the Irish motoring population, since the beginning of the year.  In total over 1,800 quotes sourced from nine different insurance  providers were recorded and analyzed each quarter allowing the AA to calculate the market average premiums across a range of categories including males, females, drivers with more or less than 5 years no claims bonus and across various age groups.

“There are quite a few variables that are likely to have brought about this small downward shift since the start of the year.” Comments John Farrell, Director of AA Insurance.  “Road deaths are down, thankfully, and there has been a drop of over ten per cent in car thefts and associated crimes over the last twelve months[1].”

The introduction of Ireland’s new and more stringent drink drive limits is also something that the AA says could have a positive impact on Ireland’s motor insurance premiums.  “In Sweden following a similar reduction in their drink drive limits they’ve seen an 11% decrease in single vehicle collisions.” Says Farrell.  “Not only has this saved lives, it’s also invariably led to a reduction in personal injury and material damage claims, something if replicated here in Ireland will have a positive impact on motor insurance premium prices.”

The AA does however flag that the recent flood event in October is likely to have a knock on effect on Irish insurance premiums across the board as insurers face claims bills expected to run into the tens of millions. Likely claims will include damage to motor vehicles as well as to property.

The AA also indentifies uninsured drivers as a major burden on motorists.  In total the Motor Insurance Bureau of Ireland paid out €59 million to 3,484 crash victims during 2010 as a result of collisions with uninsured drivers.  Just 16% of this sum was recovered by the industry funded organization.[2] “The issue of uninsured drivers is a persistent one.” Says Farrell.  “Tackling it is a serious challenge for the Garda and for the industry. However we are hopeful of a downward shift in this as the Garda are working closely with the Irish Insurance industry to improve their effectiveness  in detecting uninsured drivers.”

Male drivers and those with more than 5 years no claims discount saw the biggest improvements in their premium prices according to the AA Irish Motor Insurance Premium Index.  On average premiums for male motorists dropped from €593 to €569 between Q1 and Q3 of this year which equates to a reduction of 4%.  Those with less than 5 years no claims discount also saw their premiums fall by 4% from €722 to €693.

While premiums for female drivers remain statistically lower overall the gap between genders narrowed during the third quarter of the year.  During the first quarter of the year male drivers were typically paying 9% more for their policies however this margin was down to 7% during the last quarter.

This gap is expected to virtually disappear once the EU Gender directive comes into effect in December 2012.

A review of the AA’s Motor Insurance book also indicates that the number of motorists opting for fully comprehensive motor insurance has remained virtually static at over 90% since 2008 despite the more challenging economic conditions.

Ends

Notes to the editor:

About the AA Motor Insurance Premium Index

The AA Ireland Insurance Premium Index tracks the quarterly movement of both car and home insurance premiums. The market average premium for motor insurance has been tracked since the beginning of 2011.  The index uses a basket of 200 identical motor insurance risks that is representative of the Irish motoring population.  It obtains 1,800 premiums against these risks from nine different motor insurance providers for comprehensive and third party fire and theft (TPFT) motor policies.  The Index tracks a market average premium (average of all quotes received).

Figure 1  Market average premiums for third party fire and theft and comprehensive motor

insurance policies (Based on a basket of 200 risks quoted for by 9 insurance providers):

[2] Data sourced from the Motor Insurance Bureau of Ireland.