Irish motor insurance companies made up to 10 times the profit of their British counterparts over a 17-year period to 1999, according to a comprehensive report on the insurance industry published yesterday.
The final report of the Government-established Motor Insurance Advisory Board (MIAB) found that the total profits for Irish motor insurers from 1983 to 1999 amounted to £343 million (Irish) compared to £30 million (sterling) in the UK despite the relative sizes of the markets in question.
"It is of interest that profits have been higher in Ireland where injury compensation and the frequency of litigation costs are significantly greater than in the UK," the report said.
The chairwoman of MIAB, Ms Dorothea Dowling, said when the board looked at the figures first they thought they were "seeing things".
The MIAB, in its 750-page report to the Minister of State for Science, Technology and Commerce, Mr Noel Treacy, makes 67 recommendations aimed at bringing down the high cost of motor insurance premiums.
These include stiffer penalties, including confiscation of vehicles, for those driving without insurance and stringent measures to tackle fraudulent and exaggerated claims, as well as measures to speed up the settlement of smaller claims outside the costly judicial system.
It also recommended the establishment of a personal injuries assessment board and said self-regulation of the insurance industry must end.
The report pointed out that the cost of motor insurance in Ireland was significantly above other EU countries. Premiums in Sweden, for example, in 1997 were just 40 per cent of those in the Republic.
However, compensation payments in this State are 12 times those in the UK and legal costs four times those of the UK. The report found litigation costs in Ireland added 40 per cent to every €1 paid in compensation for injury sustained in motor accidents.
It also found a considerable disparity between the number of reported accidents and the number of claims. In 1991 the number of insurance claims was more than five times that of reported accidents. Ms Dowling said this "surely raises questions".
The report also said it was difficult to have any great confidence that the high cost of insurance would alter radically in the near future as the current situation suited too many interests, from insurers to those involved in litigation to the State, which collected a 2 per cent stamp duty on premium income.
"Successive administrations have failed to tackle the vested interests and inefficiencies that collectively may account for as much as half the premium paid by law-abiding motorists," it said.
It added that MIAB firmly believed that because motor insurance was compulsory it must be open to public scrutiny.
The report also noted that the market for private motor insurance was not competitive in Ireland.
The level of mergers had reduced some 17 separate motor insurers in 1993 to five in 2001, some of which operated under various product images without the identity of the insurer being apparent to the consumer.
Ms Dowling said there were no "quick fix solutions" to reducing motor insurance premiums.
But it was important that the Courts Bill, which proposes to increase Circuit Court awards, be "stopped".
Speaking at the publication of the report, Mr Treacy said he had been concerned for some time about the high cost of motor insurance, particularly for young drivers.
An implementation group is being set up "to progress the recommendations", and will report to Government within three months.