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"We're on our knees and begging" - motorists being driven off the road by insurance costs, committee hears

The Oireachtas Finance committee today heard from the AA together with groups representing both older and younger drivers.

11/11/2015. Traffic Accidents on M50 Motorways Source: Eamonn Farrell

IRELAND’S SPIRALLING MOTOR insurance costs were the subject of this morning’s meeting of the Joint Committee on Finance, Public Expenditure and Reform at Leinster House.

Speaking in front of the committee were Conor Faughnan of the AA, Kian Griffin of young drivers action group Ireland Underground, and Justin Moran of Age Action Ireland.

In the last year, more than a third of Irish drivers have seen their insurance rise by up to 50%, with people consequently driving with reduced levels of insurance in an attempt to manage costs.

Faughnan kicked off matters at today’s meeting by saying that rising insurance costs “is the single most important issue facing our members”.

“Competition should be being encouraged by the rising costs being seen, but that isn’t happening. Foreign insurers are in active retreat.”

That is a deeply, deeply unhealthy sign.

Faughnan said the main reason foreign insurers are so uninterested in the Irish situation is attributable to both the failure of Setanta Insurance (Ireland’s other insurers having being held liable for that insurer’s outstanding claims), but also to “murky data”, or “no clear information around claims costs” here.

Younger Drivers

Kian Griffin of Ireland Underground, a group representing Ireland’s younger drivers, said that insurance costs have young drivers feeling “as if they’re besieged on all fronts by a sense of hopelessness”.

“We’re on our knees and begging at this stage,” he said. “We don’t know where else to turn.”

If it was the saying in recent times that we need to keep the recovery going, I think I can speak for Ireland’s younger drivers when I say I haven’t experienced any recovery.

faughnan Conor Faughnan of the AA

Justin Moran, head of advocacy with Age Action, meanwhile said that older drivers are likewise being affected by “astonishing increases” in their premiums.

“22% of Ireland’s driving licences are held by those aged over 70, yet they account for just 9% of our penalty points,” he said. “Yet many older drivers are struggling to keep their cars on the road.”

For older people, being able to drive is synonymous with independence. But for many, it is an absolute necessity and is the difference between living in the community or being forced into residential care.

Solutions

The three people appearing before the committee came armed with a number of solutions to the spiralling costs being seen.

For Faughnan, there are a number of initiatives the Oireachtas could take to address the problem:

  • Update the Book of Quantum, the guide book for levels of compensation in Ireland. Drafted in 2004, it hasn’t been updated since. “There is a new draft due next month,” said Faughnan. “At present it’s hopelessly out of date and effectively useless. With the update, the courts must also be bound to abide by it.”

Faughnan cited a recent case he was made aware of where a plaintiff driver was looking for a claim payout of €150. The insurance company was only willing to pay €60. When the case went to court the judge in question awarded a claim of €508. “When an insurance company sees this they immediately know they have to refix their premiums across the board,” said Faughnan.

“Courts have to be persuaded to adhere to the Book of Quantum,” he said.

Otherwise people will continue to go to court because they feel they will do better there.

He added that he would agree that claims costs are going up, but that “we can’t tell for certain”.

Other suggestions Faughnan made include:

  • Introduce Automatic Number Plate Recognition (ANPR) for gardaí here – “It’s standard around the world and a key way to combat fraud, yet we’re dependent on a paper disc which is worse than useless.”
  • Collate an underlying database of insurance information – “The companies have this information, they just have to finish compiling it. And they have to share information with the public.”
  • Have the Minister for Justice fix a discount rate for claims. That rate was at one stage 3% but has stood at 1% following the precedent of the Gill Russell vs HSE case of 2014, which saw the presiding judge fix the rate to 1%.
  • Act upon the Setanta Insurance debacle, which is seeing Ireland’s other insurers liable for the failure of that company to the tune of €90 million – “Foreign companies are seeing that if they want to trade here they have to guarantee competitors against their failures – you don’t see McDonald’s and Burger King bailing each other out. These companies are willing to trade here but they won’t until the Setanta issue is fixed.”

“Out of hand”

Kian Kian Griffin of Ireland Underground

“Over the last 12 months the situation has gotten out of hand,” said Griffin. “And there has been a 17% increase in accidents involving uninsured drivers as a result.”

He said that premiums are increasing for young drivers regardless of whether they were making claims or having accidents.

“The people I’m speaking to see it as pure profiteering by the companies,” he said. “I have no issue with companies increasing premiums to counteract claims. My issue is when it is done to the cost of the motorist.”

We need to aid those companies to bring their costs down so they can stay profitable but not at the expense of the driver.

Griffin’s suggestions include:

  • Bring compensation in line with EU averages
  • Force the courts to adhere to the updated Book of Quantum rather than just referring to it
  • Increase the powers of the Injuries Board. Many cases which appear before the board are then referred to the courts due to its lack of binding powers.
  • Force insurers to cover older cars which have a valid NCT certificate. Many insurers currently refuse to cover a car which is over ten years old
  • Have a breakdown in premium cost presented when that premium is offered to encourage consistency in pricing

Regarding the last point, Griffin says the insurance industry is against it as “it’s anti-competition”.

I would make the argument that if everyone discloses, well, then it’s a level playing field for all.

Griffin said that the fact some insurers won’t cover older cars “is a bit of a nuisance”.

“I’m driving a 15-year-old car. I can’t afford to shop around. I know very few younger drivers who can afford a newer car,” he said.

Moran Justin Moran, Age Action

When asked by committee chairman John McGuinness of Fianna Fáil what his feedback was like from insurers, Griffin replied that he had seen “very little” feedback.

“Do they see you as a nuisance?” McGuinness asked. “Pretty much,” replied Griffin.

Age Action

From the point of view of older drivers, Moran raised a number of instances of such drivers experiencing enormous premium increases despite “never having had an accident or making a claim”.

One such example saw Frank, a 70-year-old from Dundalk, recently face a 68% increase in his premium despite never having claimed.

“Some of the premiums quoted to our members come to twice the weekly pension and many older drivers are struggling to keep their cars on the road,” he said.

In large parts of Ireland, particularly outside the main urban centres, public transport is poor.
Older people who are unable to drive face increased social isolation and must rely on friends or family for transport.

Moran argued that pensioners are only involved in a tiny percentage of accidents that cause injury.

“Just yesterday a report from Swansea University in Britain found that drivers aged 70 are involved in three-to-four times fewer accidents than 17-to-21-year-old men.”

Read: What on earth is going on with motor insurance premiums in Ireland?

Read: Motorists paying an extra €250 per year over spiralling insurance costs

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