Has your motor insurance premium gone down lately? If it has you are probably one of the few.
This is because it seems that insurers are showing a frustrating, but predictable, reluctance to pass on massive costs reductions they are benefiting from to their customers.
This is because it seems that insurers are showing a frustrating, but predictable, reluctance to pass on massive costs reductions they are benefiting from to their customers.
Tánaiste Leo Varadkar is trumpeting that average award levels in personal injuries cases have fallen by 50pc in the past two months.
A preliminary assessment on insurance costs is to be presented to Cabinet that says the drop in awards is a result of the move by judges in April to accept new guidelines on the level of damages that can be awarded in personal injuries cases.
The judges recommended award levels be slashed by around 50pc.
Award levels directly impact on the cost of insurance.
Quick off the mark to put these new lower levels of awards in place was the State’s Personal Injuries Assessment Board (PIAB).
PIAB was put in place to settle claims without the need to incur legal costs. All personal injuries claims have to go through it before they can be released to the courts.
Cabinet briefing papers show that the new guidelines have had an impact on PIAB settlements.
They show that 78pc of awards are now for €15,000 or less. This is compared with some 30pc last year.
That is hugely significant as a claimant that wants to reject a PIAB award for less than €15,000 may be forced to take their case to the district court.
District courts can only award up to €15,000, with legal fees fixed at a maximum of €3,000.
Compare this with the circuit court where awards of up to €75,000 can be made, with average legal costs of €15,000.
You can see that a development like this is a massive gain for insurers.
So has there been cuts in motor premiums, and business cover costs?
Peter Boland of the Alliance for Insurance Reform says that preliminary results from a poll it is conducting online show no reductions, with some business and voluntary groups actually seeing a rise in costs.
Many voluntary groups and businesses, such as those in the childcare sector, only have one underwriter prepared to offer them cover. A situation like that does not make for a competitive market.
Sinn Féin’s Pearse Doherty says a survey his party has conducted shows no cuts in most motor policies.
And Michael Kilcoyne of the Consumers’ Association reports members saying there has been no change in premium prices.
This is unreasonable as insurers calculate their likely costs a year in advance.
So if they think claims costs are doing to be down by around 50pc, it should at least translate into cuts of 20pc or 30pc in premiums.
This is because insurance premiums are based on future risk.
This means that every accident that happened since April 24, when the new guidelines came into play, should cost less for insurers.
But we have yet to see this translate into lower premiums.
This is shameful. It is time to bring our rogue insurers to heel, Mr Varadkar. Cutting pay-outs is no use unless tougher action is taken to force these insurer savings to be passed on.
Source: Irish Independent