Motorists ‘being forced to pay for insurance firms’ losses elsewhere’ - By Christian McCashin
DRIVERS have been hit by hikes of as much as €250 a year on car insurance as premiums soar.
Car cover has rocketed by 15.8 per cent across the board in the last year, according to official statistics released by the CSO.
Prices are soaring as companies look to recoup a bad year of losses after the country was lashed by the tail-end of Storm Darwin in 2014.
On top of a jump in insurance, motorists are also feeling a pinch at the pumps as petrol and diesel prices continue to surge due to a weakening euro against the dollar – the currency oil is sold in.
A 24-year-old driver living in north Dublin was yesterday quoted a staggering €1,697 to insure themselves for an 09 saloon car worth €3,000.
The jump in premiums has been partly put down to insurance companies struggling with a large raft of claims. But as car owners’ insurance costs shot up, cover for motorcyclists remained static.
AA Ireland’s Conor Faughnan said: ‘We are seeing motor insurance premiums go up for everybody right across the board. It’s something we warned about, we saw it coming five or six months ago.
‘There also appears to be a significant increase in claims.’ H added: ‘There’s no doubt that the insurers collectively need to push their prices up and are doing so.
‘They all wanted to avoid having to be the first to move but it is happening right across the board.
‘We are seeing motor insurance premiums going up sharply this year for everybody.’
Motoring experts claim drivers are now bearing the burden of the devastating damage caused to property by Storm Darwin last year. The bill paid out to claimants affected by the destruction topped €110million, according to the Irish
Commenting on the increases in the past year, an Aviva Insurance spokesman said: ‘Some insurers were hit badly by the weather.
‘Everybody had increased claims in 2014 due to weather incidents and some insurers were worse hit than others.
‘It’s a loss in general insurance which includes car and house insurance. House insurance will probably not go up. In insurance you put money aside to cater for your claims and if you have a high level of claims then it will be reflected in the premiums. Different insurers have taken action and increased their premium rates.’
‘After the storm... cover hikes foisted on drivers’
And on the impact of Storm Darwin, which hit in February 2014, spokesman said: ‘The storm would have had an effect but it’s variable, some insurers were more exposed.’
In relation to the Central Statistics Office insurance figures, Paul Healy, of website completecar.ie, said the extra costs also came after the number of motor insurance claims rose by over 51,000 during 2013.
However, much of the industry blames the rise on an increased number of cars on the road and those cars being of higher value as the economy picks up.
‘Motorists could be in for a nasty surprise when it comes to insurance renewal time,’ Mr Healy said. He added the millions of euro paid out as a result of storm damage, it appears, ‘will be recouped by premium increases being foisted onto motorists rather than property owners.’
An AA insurance broker said: ‘The reason it’s gone up is that in the last year the number of claims have increased... It’s gone up across the board, it’s gone up 10, 20 per cent, sometimes even more, believe it or not. Definitely it’s gone up everywhere.’
Some brokers believe car insurance was hit because it is compulsory for drivers to have it, whereas home insurance is not obligatory.
The AA broker added: ‘It’s literally all one pool of money. Any amount of claims for any insurance is going to drive up the price.’
Another broker said: ‘It’s been a soft market because of recession, so consumers were driving the prices down.
‘Insurance had some good years but last year was bad in cars and houses. Also there are more cars on the road, it means a bigger pool to have to cover... The insurance companies are trying to balance their books.’
As motorists look to find the best quote with their insurance premiums going up, brokers and insurance companies have reported that their switchboards are jammed.
And motorists are being hit by a double whammy as the falling value of the euro against the dollar means garage pump prices are creeping up again. Oil is now hovering around $60 a barrel – up around $10 in the past few weeks. A litre of petrol is up by around 4c and diesel is up by around 5c, which makes a 50-litre tankful up to €2.50 more expensive.
Director of price comparison website bonkers.ie, Simon Moynihan, said the insurance hike was ‘pretty well expected’. ‘It seems like a large rise and it is,’ he said.
‘You had two large insurance companies, RSA and FBD, who both came out in the autumn of last year and said because of high levels of claims and heavy losses, they were anticipating losses in their motor division for 2014 which would result in higher premiums. So they were priming the market for exactly these rises.’
The increases came as the insurance industry tries to recoup a €190million loss notched up in 2013.
As well as the increased claims, the Irish operation of RSA – Royal Sun Alliance – cost the company €280million due to accounting irregularities.
€110m was paid out by insurers to claimants as a result of the damage caused by Storm Darwin.
51,000 was the increase in claims made to insurers during 2013.
€190m was the loss made in 2013 by Irish insurance companies.
€2.50 is how much extra it costs to now fill a 50-litre tank with either petrol or diesel.
€1,697 is how much a 24-year-old driver was quoted for car insurance on an 09 saloon worth just €3,000 yesterday.
$10 is how much a barrel of oil has gone up on the world market over the past few weeks.