The Government programme on insurance reform is starting to deliver results, but it will take time to judge the full impact of what has been done so far and there are a number of key measures still to be pushed through. Motor insurance premiums are continuing to fall and are down by more than one quarter from their 2017 highs, according to the latest implementation report on the Government’s insurance programme. In other areas of the insurance market progress is slower, but measures in the pipeline should, in time, have an impact.
The programme to address high insurance costs is under way now over two governments and the latest action plan was launched in December 2020. It was clear by 2017 that action was needed and initially motor insurance was targeted, with a wider reform programme taken on by this Government. It is an example of the kind of action needed across a range of departments and agencies which requires significant central coordination. It shows that results can be achieved, though it is a lengthy and difficult process.
The fall in motor insurance premiums follows a period of sharp increases, which in turn resulted from a period of unsustainable competition and mispriced risk which led a number of insurers to go bust or leave the Irish market. Data from the Personal Injuries Assessment Board show a significant 44 per cent fall in award values for general damages, following new judicial guidelines. This has led to premiums falling and also , as figures out yesterday showed, rising profits for insurers. There may be timing issues here – and insurers do need to make a profit – but premiums to motorists should continue to fall.
One complicating factor is that general insurers have in many cases been using profits from motor insurance to cross-subsidise other areas, including liability insurance. Presumably lower claims costs will also feed through here. Also, a legislative change is planned here to ensure that those who suffer injury take some responsibility for their own actions. Measures to combat fraudulent claims, including new cooperation between the Garda and the industry, have also had some results and are due to be progressed further. These are important steps to combat the claims culture – the unquestioning attitude that no matter how an accident happens, the insurer will pay a significant sum.
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As the latest implementation report shows, the Irish market needs to involve less litigation and more use of mediation – legislation before the Oireachtas is designed to increase the role of PIAB in this area. The Bill also proposes to change the board’s name to the Personal Injuries Resolution Board, to better reflect its role. The industry must also play its part. And more competition in the sector, another of the plan’s goals, would give it welcome encouragement to do so.