Insurance Prices – be thankful we’re not as bad as UK

The average cost of motor insurance rose during the last year but only slightly. It is up by three per cent and most of that is explained by the increase in the government levy on insurance from 3 per cent to 5 per cent One more way in which the taxman gets his pound of flesh from us.

But actually, this is a good story. Irish motorists are in fact reaping benefits now from reforms that were carried out ten years ago. If you doubt this you have only to compare what we are paying here in Ireland with the going rate in the UK.

The AA provides motor insurance of course so we keep a very close eye on the market. The cost of motor insurance is accurately tracked using a basket of over 200 sample cases and obtaining 2,000 quotes each quarter. This AA Motor Insurance index shows us that the average price paid by an Irish motorist for insurance is now €584. That is a chunky bill but it is well short of what they are paying across the water where the average price is an eye-watering €1,164.

That is a dramatic change when you consider that ten years ago the Irish driver typically paid double the UK equivalent and now it is the other way around. It is a question of what we have done here versus what they have not done over there.

Ten years ago I recall very well the extent to which the cost of insurance was the major thorn in our side, especially for young drivers. We had a major road safety problem but we also had a compensation culture. The system rewarded the legal industry handsomely for its involvement in what should have been simple, lawyer-free compensation cases.

The catalyst for reform was Dorothea Dowling, charged with the task by the then Enterprise minister Mary Harney. Dowling’s work produced the Motor Insurance Advisory Board report and this subsequently lead to the establishment of the Injuries Board which she now chairs.

That injuries board oversees personal injury claims and recommends compensation amounts. While it did not mean the end for solicitors it did eliminate the unholy waste that used to bedevil the entire system. It also went some way to countering the compensation culture that saw the innocent majority paying way over the top for insurance in order to pay for the lawyers, chancers, gombeen men and associated costs that between them were accounting for about a third of all compensation paid out.

As a piece of public policy it worked. The Irish consumer saw real prices for insurance fall steadily throughout the last ten years. Road accidents are down and the cost of settling those claims also fell.

The UK has gone in the other direction. If you ever get to catch any British TV during the daytime you will know what I mean. The ads that you see are for personal injury lawyers, claims lines and other incentives for people to come forth and sue.

I cannot help but feel that these are cynically targeting vulnerable people. There is no doubt that it is having an effect. The British have always had very safe roads and we are only just catching up with them in that regard. Yet they now have amongst the safest roads and amongst the expensive Insurance prices anywhere in the world. All those compo claims are added up and factored in to the price charged so that every single driver makes an unknown and unwelcome donation to the big compo fund.

So while the insurance renewal will never be welcome on the doormat we can at least be thankful that for once we are doing better than some.

 

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