Insurance sector exposed: Stop runaway gravy train
Yesterday’s Central Bank report showing the cost of motor insurance claims fell 2.5% between 2009 and 2018 but premiums rose 42% holes the insurance sector’s guff below the water line. The claim that car insurance costs have risen because of spiralling payouts and claims is simply untrue.
The bank reported that the disconnect between fees and claims was even more pronounced over the last five years. The average cost of claims per policy rose 14% between 2013 and 2018 but average premiums rose over four times faster, by a smash-and-grab 62%.
It is not surprising then that the industry generated an average operating profit of 9% last year, nearly twice that seen in Britain. Like our banks, the insurance sector charges fees and rates far above the EU norms which raises questions around why Irish consumers cannot freely shop for these products across the EU’s single market.
The report again underlined high legal costs. Average court compensation was €45,390 with average legal costs at €23,031, over 50%. However, the average settlement secured through PIAB was €22,631 with average legal costs at €753, which is a plausible 3%. No matter how this process is dressed up it is a concerted fleecing of consumers. To pretend otherwise just adds to the grubby fiction.
Car insurance is a legal obligation and it is time that compunction was matched with social obligation. The Government must put the brakes on this gravy train once and for all.
