The envelope arrives on the hallway floor with a thud. You know it’s the car insurance renewal and, before you even open it, you predict it’s not going to be pretty.
Increases of 30%, even 40%, have been making the headlines for over a year now and no one seems to be escaping. Earlier this year, the CSO confirmed that the cost of insuring a car jumped by 33.6%, meaning that a policy that cost €550 last year is now setting you back €729.
You may ask why? You’re driving the same car, you’ve made no claims and there hasn’t been any adjustment to your policy.
“It’s a natural logical question,” explains Conor Faughnan, director of consumer affairs with the AA. “However, you can’t think about your premium in isolation. Insurance means the cost of risk is shared across the board, that’s the very nature of it. And there are varying external factors influencing your premium.”
1. An unstable market
Firstly, and one of the overriding factors behind these price hikes, is the fact that, for years, we were actually paying too little for car insurance. According to the Central Bank, the average motor insurance premium in 2015 was €661. Compare this to 2003 when the average was €905. That’s a difference of 27%.
Conor says: “We saw prices fall in real terms, year in, year out. Motorists don’t appreciate it now, but even with today’s rates, we’re still way off averages of €905. Over the past 10 years, insurance companies undercut each other so much. By 2014, they were making losses at levels that couldn’t be sustained. Selling insurance below cost was pretty stupid and you have to think, who do they have to blame only themselves? However, the current average figures are probably what we should have been paying all along and we’re now coming in line with averages in the UK.”
2. Setanta Insurance
When Setanta Insurance went bust last year, it caused uproar for over 60,000 motorists, but, over a year later, the effects are still being felt, specifically when you open your insurance renewal form. Setanta left over €90m of unpaid claims in its wake and that is now effectively being picked up by ordinary motorists.
Michael Horan, non-life insurance manager with Insurance Ireland, says: “Recently, the High Court ruled that the Motor Insurance Bureau of Ireland has to pick up the tab of those unpaid claims, instead of the Insurance Compensation Fund. This essentially means that the surviving insurance companies need to pay for the losses of a competitor who undercut them in the first place. This doesn’t happen in other industries. Imagine Tesco going bust in the morning but Dunnes Stores being told they have to pick up their losses. It doesn’t happen.”
Ultimately, this is being passed down to the consumer because, as a general principle, premiums are driven by the cost of claims.
Conor also says: “On top of that, the broader impact was that the collapse of Setanta created a sense of panic among insurers and they realised they needed to be more cautious in their quotes, again adding to premiums.”
Listen to a discussion of rising car insurance costs in our podcast below:
3. Cost of claims
You might not have claimed in the past but the fact is that the cost of claims is rising across the board and that is impacting individual premiums. In 2014, there was a change in court limits, increasing the maximum claim for a personal injury from €38,000 to €60,000.
Michael Horan says: “Award levels are now at an all-time high. Furthermore, the average claim for whiplash is €15,000 in Ireland, whereas in the UK it’s €5,000. Whiplash accounts for 80% of claims – compare that to France where it is only 3%. Not only is the amount being granted increasing, the number of claims is also on the up. There was an 8% increase in claims from year end 2013 to year end 2014.”
So, why the increase in the amount being granted?
“Although the Injuries Board was set up in 2004 to deal with personal injury claims, the fact is only 20% of cases go through the body,” explains Conor. “A further 70% are being settled by the insurance industry but up to 10% go to court, which means lawyer fees are added to the mix and are being paid through premiums of ordinary motorists.”
Looking Forward
So, where do we go from here? Are these excessive claims going to continue to bring up our premiums year on year? Fortunately, it has come to light that some awards are excessive. Recently, four motor accident cases were brought to the Court of Appeals where it was determined that the amounts granted were too much. In March, for example, in the Nolan versus Wirenski case, the award was reduced by 46% from €120,000 to €65,000.
Conor says: “We’re hoping for some stability going forward. To do this, the Injuries Board has to be strengthened.”
One way to achieve this, says Conor, is through the Book of Quantum, the document used by the Injuries Board.
“There are two problems at present. First of all, this document is very granular – it lacks specifics. It has to be rewritten again in a more comprehensive way, with much more detail.
“The AA are lobbying that it should then be binding in the courts. At the moment, the courts just have to ‘have regard to it’ which means everything and nothing – it’s far too vague. However, if they had to stick to it, it would mean consistency in terms of the amount granted for claims.
“At the moment, as soon as you deviate away from it, it encourages a merry-go-round. Take a broken arm for example. A claim might be worth €18,000 but a solicitor might say: ‘I think you can get more.’ Then the insurance company ends up settling out of court for €21,000, for example. There is no consistency. If we had a Book of Quantum which is adhered to, the whole thing becomes more manageable and brings down costs.”
Gone Too Far
That isn’t the full story though. Conor says: “There are reasonable points been made by the insurance companies concerning the increase in premiums and many are valid. However, there are other excuses being put forward which we don’t believe are reasonable and they are showing evidence of complacency. We believe some companies have risen their premiums too high, beyond what can reasonably be justified. The insurance industries were all trying to undercut each other for years, but then when one took the leap and rose levels, the rest followed fairly pronto and some have lost the run of themselves. So now, more than ever, consumers need to shop around.”
How much are you being asked to pay for car insurance?
Recently, we were contacted by a reader whose insurance jumped from €568 in 2015 to €734 this year.
The reader, aged 38, drives a 2002 Golf 1.9-litre diesel car and had a third-party fire and theft policy. He has personal loss to the value of €400, windscreen cover, 24-hour breakdown assist and bonus protection to the value of €78 per year. However, he was able to bring his premium down to €655, a reduction of €79, by removing his open insurance. However, he still believes that it is a very steep price for a third-party fire and theft policy on a 14-year-old car. What kind of premiums were you charged and were you able to reduce it? Email cleahy@farmersjournal.ie
It’s the most important meal of the day and, as consumers, we want the Irish food and drinks industry to understand our breakfast habits so they can continue to provide products that make our breakfast better. Bord Bia recently launched its Breakfast Club report to over 50 Irish food and drink producers, including Flahavan’s, O’Brien Fine Foods and O’Egg.
According to the study, at breakfast time Irish consumers are looking for options that are healthy, low-cost and easy to prepare. Some of the findings include:
Bread and toast tops the survey as Ireland’s favourite midweek breakfast for one third (33%) of people. This is followed by porridge (25%), cereals (19%), eggs (18%) and fruit (17%). Tea is the preferred drink at home with nearly half (44%) of people drinking it during the week, while another 28% drink coffee. Water and fruit juice follow behind at 12% and 9% respectively, while only 4% of people drink a fruit smoothie they have made themselves.Half of all breakfasts in Ireland are eaten between 8am and 10am. On average, we spend 13.6 minutes on our breakfast during the week and 16.3 minutes at the weekend. Half of us will never miss breakfast while those who never or rarely eat breakfast are likely to be single and young settlers (aged 21 to 29). In line with Irish adults, 85% of Irish kids also eat breakfast at home. Cereal was found to be the No 1 choice for kids, followed by toast or bagels, and porridge. Parents choose their kids’ breakfast items as “they know the children will eat it” and “to get something into them”.
The envelope arrives on the hallway floor with a thud. You know it’s the car insurance renewal and, before you even open it, you predict it’s not going to be pretty.
Increases of 30%, even 40%, have been making the headlines for over a year now and no one seems to be escaping. Earlier this year, the CSO confirmed that the cost of insuring a car jumped by 33.6%, meaning that a policy that cost €550 last year is now setting you back €729.
You may ask why? You’re driving the same car, you’ve made no claims and there hasn’t been any adjustment to your policy.
“It’s a natural logical question,” explains Conor Faughnan, director of consumer affairs with the AA. “However, you can’t think about your premium in isolation. Insurance means the cost of risk is shared across the board, that’s the very nature of it. And there are varying external factors influencing your premium.”
1. An unstable market
Firstly, and one of the overriding factors behind these price hikes, is the fact that, for years, we were actually paying too little for car insurance. According to the Central Bank, the average motor insurance premium in 2015 was €661. Compare this to 2003 when the average was €905. That’s a difference of 27%.
Conor says: “We saw prices fall in real terms, year in, year out. Motorists don’t appreciate it now, but even with today’s rates, we’re still way off averages of €905. Over the past 10 years, insurance companies undercut each other so much. By 2014, they were making losses at levels that couldn’t be sustained. Selling insurance below cost was pretty stupid and you have to think, who do they have to blame only themselves? However, the current average figures are probably what we should have been paying all along and we’re now coming in line with averages in the UK.”
2. Setanta Insurance
When Setanta Insurance went bust last year, it caused uproar for over 60,000 motorists, but, over a year later, the effects are still being felt, specifically when you open your insurance renewal form. Setanta left over €90m of unpaid claims in its wake and that is now effectively being picked up by ordinary motorists.
Michael Horan, non-life insurance manager with Insurance Ireland, says: “Recently, the High Court ruled that the Motor Insurance Bureau of Ireland has to pick up the tab of those unpaid claims, instead of the Insurance Compensation Fund. This essentially means that the surviving insurance companies need to pay for the losses of a competitor who undercut them in the first place. This doesn’t happen in other industries. Imagine Tesco going bust in the morning but Dunnes Stores being told they have to pick up their losses. It doesn’t happen.”
Ultimately, this is being passed down to the consumer because, as a general principle, premiums are driven by the cost of claims.
Conor also says: “On top of that, the broader impact was that the collapse of Setanta created a sense of panic among insurers and they realised they needed to be more cautious in their quotes, again adding to premiums.”
Listen to a discussion of rising car insurance costs in our podcast below:
3. Cost of claims
You might not have claimed in the past but the fact is that the cost of claims is rising across the board and that is impacting individual premiums. In 2014, there was a change in court limits, increasing the maximum claim for a personal injury from €38,000 to €60,000.
Michael Horan says: “Award levels are now at an all-time high. Furthermore, the average claim for whiplash is €15,000 in Ireland, whereas in the UK it’s €5,000. Whiplash accounts for 80% of claims – compare that to France where it is only 3%. Not only is the amount being granted increasing, the number of claims is also on the up. There was an 8% increase in claims from year end 2013 to year end 2014.”
So, why the increase in the amount being granted?
“Although the Injuries Board was set up in 2004 to deal with personal injury claims, the fact is only 20% of cases go through the body,” explains Conor. “A further 70% are being settled by the insurance industry but up to 10% go to court, which means lawyer fees are added to the mix and are being paid through premiums of ordinary motorists.”
Looking Forward
So, where do we go from here? Are these excessive claims going to continue to bring up our premiums year on year? Fortunately, it has come to light that some awards are excessive. Recently, four motor accident cases were brought to the Court of Appeals where it was determined that the amounts granted were too much. In March, for example, in the Nolan versus Wirenski case, the award was reduced by 46% from €120,000 to €65,000.
Conor says: “We’re hoping for some stability going forward. To do this, the Injuries Board has to be strengthened.”
One way to achieve this, says Conor, is through the Book of Quantum, the document used by the Injuries Board.
“There are two problems at present. First of all, this document is very granular – it lacks specifics. It has to be rewritten again in a more comprehensive way, with much more detail.
“The AA are lobbying that it should then be binding in the courts. At the moment, the courts just have to ‘have regard to it’ which means everything and nothing – it’s far too vague. However, if they had to stick to it, it would mean consistency in terms of the amount granted for claims.
“At the moment, as soon as you deviate away from it, it encourages a merry-go-round. Take a broken arm for example. A claim might be worth €18,000 but a solicitor might say: ‘I think you can get more.’ Then the insurance company ends up settling out of court for €21,000, for example. There is no consistency. If we had a Book of Quantum which is adhered to, the whole thing becomes more manageable and brings down costs.”
Gone Too Far
That isn’t the full story though. Conor says: “There are reasonable points been made by the insurance companies concerning the increase in premiums and many are valid. However, there are other excuses being put forward which we don’t believe are reasonable and they are showing evidence of complacency. We believe some companies have risen their premiums too high, beyond what can reasonably be justified. The insurance industries were all trying to undercut each other for years, but then when one took the leap and rose levels, the rest followed fairly pronto and some have lost the run of themselves. So now, more than ever, consumers need to shop around.”
How much are you being asked to pay for car insurance?
Recently, we were contacted by a reader whose insurance jumped from €568 in 2015 to €734 this year.
The reader, aged 38, drives a 2002 Golf 1.9-litre diesel car and had a third-party fire and theft policy. He has personal loss to the value of €400, windscreen cover, 24-hour breakdown assist and bonus protection to the value of €78 per year. However, he was able to bring his premium down to €655, a reduction of €79, by removing his open insurance. However, he still believes that it is a very steep price for a third-party fire and theft policy on a 14-year-old car. What kind of premiums were you charged and were you able to reduce it? Email cleahy@farmersjournal.ie
It’s the most important meal of the day and, as consumers, we want the Irish food and drinks industry to understand our breakfast habits so they can continue to provide products that make our breakfast better. Bord Bia recently launched its Breakfast Club report to over 50 Irish food and drink producers, including Flahavan’s, O’Brien Fine Foods and O’Egg.
According to the study, at breakfast time Irish consumers are looking for options that are healthy, low-cost and easy to prepare. Some of the findings include:
Bread and toast tops the survey as Ireland’s favourite midweek breakfast for one third (33%) of people. This is followed by porridge (25%), cereals (19%), eggs (18%) and fruit (17%). Tea is the preferred drink at home with nearly half (44%) of people drinking it during the week, while another 28% drink coffee. Water and fruit juice follow behind at 12% and 9% respectively, while only 4% of people drink a fruit smoothie they have made themselves.Half of all breakfasts in Ireland are eaten between 8am and 10am. On average, we spend 13.6 minutes on our breakfast during the week and 16.3 minutes at the weekend. Half of us will never miss breakfast while those who never or rarely eat breakfast are likely to be single and young settlers (aged 21 to 29). In line with Irish adults, 85% of Irish kids also eat breakfast at home. Cereal was found to be the No 1 choice for kids, followed by toast or bagels, and porridge. Parents choose their kids’ breakfast items as “they know the children will eat it” and “to get something into them”. 
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