Insurance payouts driving up premiums, minister says
The level of insurance payouts is driving up the costs of premiums in Ireland, according to a junior minister who has defended his work on reducing costs to consumers.
Minister of State Michael D’Arcy, who has been tasked with reform of the insurance sector, told the Oireachtas Finance Committee that fraudulent and exaggerated claims are pushing up the costs of doing business. The increasing costs are being passed onto customers.
However, Mr D’Arcy said that the range of payouts - as set out by the Book of Quantum - are up to five times as much as comparable awards in Britain.
“If somebody is getting five thousand in the UK, they’re getting 25,000 here,” Mr D’Arcy told the committee.
“It’s tax-free, and it’s very lucrative. So even the best of people, who have been impacted through no fault of their own, will pursue a case because the book of quantum is at the level, the threshold that it is at.
“That’s why this market is not competitive, that’s why you don’t have fifteen or twenty insurers in this market,” he said.
There were heated exchanges between Mr D’Arcy and Deputy Pearse Doherty (SF), with the latter criticising the progress made in reducing premiums for customers.
Mr D’Arcy said premiums have reduced by 23% since peaking in July 2016.
I don’t have a magic wand to instruct the guards, the DPP, the court service, the Central Bank, the State Claims Agency, PIAB (Personal Injuries Assessment Board), and the other departments within the sector.
“It’s a big, broad sector deputy and we’re moving in the right direction,” he said.
Mr D’Arcy said he will seek a meeting with Garda Commissioner Drew Harris between now and Christmas to request the establishment of a dedicated section within the National Economic Fraud Bureau to tackle insurance fraud.
Daragh Cassidy, head of communications at comparison website bonkers.ie told the Irish Examiner that customers are starting to see a reduction in the cost of their premiums. But the decreases, however, are from prices that had risen significantly in recent years.
"There's definitely been some downward pressure on motor insurance premiums in particular recently, which is reflected in the most recent CSO inflation data which shows motor insurance costs falling over 9% over the past year with health insurance also down around 5%," he said.
"However this needs to be seen in the context of quite substantial price rises over the past few years. And the fact remains that many consumers are still overpaying by not shopping around and searching for a better deal.
"There's also a feeling, particularly when it comes to insurance, that customers will be rewarded for their loyalty when it comes to making a claim and this can deter people from switching," he said.
"However nothing could be further from the truth as your insurance company will only pay out what's explicitly covered under your policy’s terms and conditions," Mr Cassidy added.
