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Car insurance gone up? Insurers will soon have to tell you why

New laws will be in place by the end of the year to ensure that insurance companies tell customers why they are paying more.

Image: AP/Press Association Images

INSURERS WILL SOON be required to explain to drivers why their car insurance premiums have increased.

The recommendation is one of many made in a report published this afternoon by a special government working group set up to examine the high cost of car insurance premiums.

The report from the Cost of Insurance Working Group covered several key areas, such as improving data availability reducing the costs in the claims process, with a view to bringing down high car premium costs for consumers.

The  report states the Department of Finance will engage with the insurance industry to establish a common protocol to communicate to customers the reasons for the large increases.

The report states the new protocols must be agreed by the end of the summer.

Legislation 

In order to ensure insurance companies comply with the new system, legislation is needed to underpin the new rules. The department states new laws will be in place by the end of 2017.

While insurance companies will be mandated to explain why they are increasing their customer’s premiums, Minister of State for financial services Eoghan Murphy explained that the government can’t interfere in the premiums set by insurers under EU law, stating the premium price must be based on risk.

 10/01/2017. Motor Insurance. Pictured is the M Source: Leah Farrell

“The new measures being introduced will mean “insurance companies must explain to the driver why their premium might have gone up – even in the situation where they might not have any additional penalty points or they haven’t had a claim made against them – to explain exactly why they got that increase.

“We hope the protections will help them better understand the increase, and give them more time to shop around in terms of getting a better price,” said Murphy.

Last year, it was widely reported that some motorists were seeing their car insurance quotes increase from anything between 50% – 300% in some cases.

Attention to the issue resulted in the establishment of the working group, which met 12 times over the course of last year, in which it embarked on a consultation process with numerous stakeholders.

The Joint Oireachtas Committee on Finance, Public Expenditure and Reform also published a report on the rising cost of car insurance.

Today’s publication makes over 30 recommendations in total, one of which is that a standard protocol should be put in place by insurance companies “to ensure greater consistency of treatment for returning emigrants”.

Uninsured drivers 

The report also commits to addressing the increase in uninsured drivers on the roads. Murphy told TheJournal.ie this afternoon that the rise in uninsured drivers on the road is linked to the rise in premiums.

It was reported last month the number of uninsured cars on Irish roads has nearly doubled to over 150,000 in the space of five years.

A new uninsured drivers database is to be established which will allow gardai check insurance compliance by using automatic number plate recognition (ANPR).

The ANPR system had to be disabled in 2014 due to the “unreliability of insurance data”, finds the report. Over 100, garda cars are equipped with ANPR technology.

The report states the insurance industry indicated to the minister in November that it will be in a position to roll out the new database in respect to all privately owned vehicles by the third quarter of this year.

Emigrants 

Emigrants returning home are also mentioned in the report. It states that it should be standard protocol by insurance companies “to ensure greater consistency of treatment for returning emigrants”.

Many returning emigrants have complained of the fact that insurance companies often do not take experience driving abroad into account.

For example, an emigrant who had lived in, and been driving in, the UK for five years may not be able to immediately get a no claims bonus upon their return to Ireland, even if they had no claims during their time abroad.

The report recommends that insurers “implement policies to accept driver experience from abroad when a person has previous driving experience in Ireland and is coming from a country that drives on the left side of the road.”

The deadline for this measure to be implemented is the second quarter of this year.

Personal injuries commission

The working group also recommends the establishment of a personal injuries commission to offer guidance on compensation claims.

Mr Justice Nicholas Kearns has been appointed as Chairperson of the new commission.

A new national claims database is also to be established to address the lack of transparency in the claims area.

While Murphy admitted “there is no silver bullet to reduce the cost of insurance, insofar as no one recommendation will solve the problem on its own”, he said he believed the action plan would “deliver fairer premiums for consumers”.

Fianna Fáil Spokesperson on Transport Robert Troy said people right across the country have being grappling with rising motor insurance costs in recent years and the government have been slow to move on the issue.

“The cost of car insurance has risen by a minimum of 51% since January 2011 and the situation is even worse for those looking to insure vehicles associated with their business. These increases are unsustainable. Exorbitant insurance costs are putting enormous pressure on household budgets and are costing jobs,” explained Troy.

He said he is “deeply concerned” with the timeline being reported regarding the implementation of the committee’s proposals.

It has been suggested that it could take as long as 18 months before certain measures, such as the creation of detailed databases to combat fraud, are implemented. This indicates that the Government simply is not giving this crisis the attention it needs.

Read: ‘His car insurance jumped from €7k to €56k – he’s being forced out of business’>

Read: “We’re on our knees and begging” – motorists being driven off the road by insurance costs, committee hears >

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