Motor Insurance Premiums – What’s really going on? Part 1
The issue of motor insurance premiums has had extensive coverage in the media in recent weeks.
Insurance companies have been quick to suggest the factors responsible for this as the number of personal injury claims, the level of personal injury awards and of course, the allegation that some of these claims are exaggerated.
Insurance companies complain that they are losing money however, as recently as last March; Aviva claimed that business profit was up 13% to €69 million (up 20% on the previous year!)
So what is going on?
A number of factors seem to be relevant:
- With the growth in economic activity, the number of cars on the road has increased. Ask anyone who tries to leave Dublin on a Friday evening, the queues stretch as far as the Kilcullen bypass.
- Insurers have, in recent years, been engaged in a battle for business leading to reduced premiums. The wisdom of that strategy is in need of questioning!
- Reduced Garda overtime suggests that there may be lower grade presence on the roads which in turn has consequences for issues such as compliance with the rules of the road and insurance checkpoints. A simple example is the recent data to suggest that defective tyres play a significant role in car accidents. When was the last time your tyres were checked as a Garda checkpoint?
- There is evidence to suggest that there are a significant number of uninsured drivers on the road.
- There are approximately 2 million cars on the road – 47% of which are ten years old or over. Cars, by their nature, become less reliable with age.
- The collapse of Setanta Insurance and questions as to how this was allowed to happen has caused the market to rethink its pricing policy.
Have a think about these factors, and check back here next week, where we review one little known publication that can assist in throwing some light on this issue.