Motor insurance up three per cent

Despite some dips throughout 2011, the average price of a motor insurance policy in Ireland has increased three per cent.

According to the latest results of the new AA Premium Index, which has been monitoring average motor insurance premiums in Ireland on a quarterly basis since the beginning of 2011, insurance has increased year-on-year from €567 in January 2011 to €584 in February 2012.

The year saw a slight increase in personal injury claims offset by a slight reduction in claims costs. There was also a surge in motor and property insurance claims following the flooding in Dublin last October, although it will be next year before that will be reflected in premiums. However the biggest reason for higher prices is a frustrating one, according to the AA, and that is higher tax.

“The Government levy on all non-life insurance policies has increased from three per cent to five per cent,” says director of policy Conor Faughnan. “This alone adds nearly €12 to the average policy and more to the higher value ones. It is one more straw on the camel’s back for motorists already suffering tax increases on fuel and road tax.”

The AA Irish Motor Insurance Premium Index looks at 1,800 motor insurance quotes from nine different providers. Eight separate segments are listed which look at motorists by gender, age and no claims discounts. Year-on-year and quarter-on-quarter increases have been recorded across all categories with females drivers being worst affected. The average premium for women increased by five per cent on this time last year the AA reports.

Despite this, men are paying an average of €53 more than their female peers for their motor insurance, a figure which equates to a variance of nine per cent. This gap, however, is set to be a thing of the past when the EU gender directive takes effect in December this year.

The lowest year on year increase of just 0.9 per cent was recorded among the under 30s who are currently paying €891 on average.

While the increase is bad news for Ireland’s besieged motorists, AA Ireland reports that Irish motorists are faring far better than those in Britain who have been hammered by a 15 per cent year-on-year increase, bringing their average motor insurance premium to £971.40 (€1,164 ) - a figure which is influenced by the prolific “no win, no fee” personal injury claims culture that has developed in Britain, AA Ireland reports.

“Britain is in the same situation that Ireland was in in the 1990s,” says Faughnan. “A horrendous claims culture, excessively generous injury settlements, and ineffective scrutiny of claims meant that Irish motorists were paying among the most expensive insurance in Europe with the lawyers the only ones winning. The AA was involved in campaigning to have that corrected and the establishment of PIAB in 2003 was a landmark. Since then our premiums have been falling, while Britain’s have been climbing. Now the average British premium is double the average Irish premium.”

AA Ireland also surmises that the €127 million claims bill from last October’s floods is bound to affect non-life assurance premiums across the board over coming months.

“In a period of just two years we experienced four of the most destructive weather events recorded in this country at a cost to insurers of almost €900 million. If we take a rough figure of 3.1 million non-life insurance policies for Ireland, this would equate to an increase of €290 per policy if absorbed in one single year,” calculates Faughnan.

Despite the inflationary pressures of the two per cent levy and weather related claims, the AA says initiatives such as the Graduated Driver Licensing System and reduced drink drive limits are likely to have a continued positive effect on motor insurance premiums.

“Last year we recorded our lowest level of road deaths since records began 50 years ago. As we continue our campaign towards zero road deaths a positive secondary side effect of this will be lower motor insurance premiums,” says Faughnan.

AA Ireland also flags car crime rates, fraudulent claims and uninsured drivers as other factors which will influence the movement of motor insurance premiums in the year ahead.

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