The property business's mantras about location applies to car insurance as well: where you live sets your policy price. Michael McAleer reports
In the endless search for affordable housing, few of us have the luxury of choosing our abodes on the principle that there are more beneficial rates on car insurance if we live in Tullamore rather than Tallaght.
It is generally accepted that insurance premiums differ depending on where you live. Those of us living in areas where local youths like nothing better on a summer's night than singing hearty renditions of Christy Moore songs around a burning new Mercedes, are bound to pay more in premiums. Others, lucky enough to reside in the leafy suburbs and who garage their car, wrapped in its tarpaulin each night, will usually pay less.
Living in a city centre exposes motorists to more chance of car crime, while the opportunity for collecting an unfortunate dint to the bodywork is enormous on congested and often narrow streets. The downside is that people in those areas have to pay more, but the upside is that people in places where their cars are relatively safe are not subsiding crimes and accidents that are nothing to do with them.
According to a report by Deloitte and Touche commissioned the Department of Enterprise and Employment report some years ago, the difference in premiums between Dublin and the rest of the State ranged from 22 per cent and 32 per cent, depending on the other factors of age and, in some cases, gender.
While the denizens of our fair city may gripe at the sheer injustice of it all, a report issued last year by the Irish Insurance Federation, carried out by actuarial consultants Tillinghast Towers Perrin (TTP), attributes the difference to the fact that Dublin policyholders had a higher frequency of claims than other parts of the State. Although the size of these was lower than those outside the city, the report said a Dublin person with comprehensive insurance has a 36 per cent higher frequency to make a claim, or makes 36 per cent more claims than an insured driver outside Dublin.
The case for higher premiums is also supported by the crime statistics. The latest Garda annual report shows vehicle theft to be on average 6.5 times greater in Dublin than in any other region in the State. The number of unattended cars stolen, per thousand licensed, was 26 in the Dublin Garda district, compared to six in the eastern district, with the other districts ranging between three and four per thousand.
In the case of regional differences, as with all others, insurance firms repeat their well-worn mantra that the premiums are "set based on actuarial studies of the claims". They also remind customers that they are free to shop around.
However, the fact is that direct competition between firms is an ideal rather than a reality. The various firms have adopted niche strategies and price accordingly. A number of mergers in recent years had seen 17 companies in 1993 being reduced to just five in 2001.
Although 27 companies are listed as operating in the motor insurance industry in Ireland, the Motor Insurance Advisory Board report noted that the only "real choice" for the consumer was dominated by a handful of legal entities with three companies accounting for 67 per cent of the market.
While a number of firms concentrate on the young driver market and weight their premiums accordingly, others prefer to pick another segment, defined either by sex, profession or address. If you are over 30 you will likely receive a quotation from all of them. However, only one or two will be in the realm of possibility for your bank balance, the rest will probably come to more than twice the value of the car.
Therefore, like loyal followers in the religion of the motorised vehicle, when the high priests of insurance take our engine size, age, employment details, shoe size and calculate to the nearest euro what our premium will be, we may gripe.
But, in the end, it would seem those wishing to partake in the global religion that is motoring must bow their head, accepting that one must not challenge the great mathematical minds that are the actuaries. To call into question the principles of this science of the actuary is to put yourself in line for conversion to that group of pagan heathens that are the cyclists, or perhaps even the lowly pedestrians.
This situation cannot be allowed to continue. The MIAB report laid out the facts. In simple terms, the private motor insurance market is not competitive. Vested interests and inefficiencies may collectively account for as much as half the premium paid by motorists.
The high legal costs attributed to our exorbitant claims costs have resulted in calls for the creation of a Personal Injuries Assessment Board, taking undisputed cases out of the costly court system. Sweden has been operating such a system since 1936 and insurance costs are 12 times lower than in Ireland. Despite calls over the decades for such a system to be introduced here to cut non-compensation costs, now at nearly 42 per cent of the overall claim cost. Yet it is still not in operation.
WITH an election fast approaching, it is time motorists demanded commitments from politicians that the MIAB recommendations are implemented and the 750-page report does not simply become an expensive door-stopper. We now have the evidence before us. It is up to the Government, whoever they will be, to act. What's more, the Equality Authority and Competition Authority must prove their worth in this marketplace.
As for those who wish to shop around, the advice is simple: with a limited number of firms offering insurance in Ireland, the price of a few calls could save you hundreds of euros. But until we force the Government to act and make the market more consumer friendly, prepare to pay above the odds.