‘There Is A Cartel Of Insurance Underwriters’

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The cost of motor insurance.

It’s been soaring.

Yesterday, during a Dáil debate about the trend, Independents 4 Change TD Clare Daly said the following:

We all know the overall figures. More than one third of Irish drivers have seen the cost of their insurance increase by more than 50% in the past year. We could all tell our own individual horror stories. It has gone beyond being a rip-off at this stage.

Last week, a father contacted me about his son who paid €2,400 for his first insurance cover. His renewal quote was €3,100, which was then withdrawn, allegedly because he had changed from working in retail to being a labourer. They contacted the Ombudsman who told them to shop around, which they did, but the nearest quote was €6,500.

This car is registered for social, domestic and pleasure purposes. It is not used for his job. The situation is utterly ridiculous. The young man ended up changing jobs because he needed a car but could not pay the cost of the insurance.

The reality is that the increases being imposed are leading people to drive with reduced cover, which is very concerning, or to the imposition of severe economic hardship. It is simply unacceptable.

We know AA studies and so forth have blamed fraudulent activity and high costs in legal claims. However, they fail to mention the profiteering of insurance companies. This is the nub of the issue.

I support the Fianna Fáil measure calling for a national database to record premiums and settlements. This can be done anonymously and would help provide some transparency. The truth, however, is that there is no reason for the current situation whatsoever and the only credible explanation is that a cartel is operating for profit.

For example, in the modern era of new technologies, the use of dash cams can be implemented. A dash cam can record footage which could be used as evidence in the event of a traffic incident. They can record speeds through GPS tracking and issue proximity warnings, for example, when changing lanes.

The encouragement of the use of this type of technology has the potential to massively simplify the insurance process. Do the insurance companies want it? We can bet they do not, because there is a cartel of insurance underwriters and companies profiting from the current situation.

I know of an insurance brokerage company which set itself up with the view to operating with dash cams in particular and using them as a mechanism to reduce premiums and simplify the claims process.

The company was taken over by a bigger insurance company and the dash cam programme has ended up in the bin. That is the real nature of the insurance business in Ireland.

Figures show that the number of collisions has declined with the implementation of these types of technology, which are already available. We could radically transform the situation. There is no need for it whatsoever and unless we get to the heart of the matter the problems will continue.

It is simply unacceptable for young people, in particular, but for other drivers as well, who, as other Deputies have said, against the backdrop of an inadequate public transport system, need their cars and should be able to drive them safely.

Transcript via Oireachtas.ie

Dáil passes FF motion on car insurance costs (RTE)

54 thoughts on “‘There Is A Cartel Of Insurance Underwriters’

  1. The Real Jane

    I’m not 100% convinced that if fraudulent or exaggerated claims stopped being made or stopped being settled overnight, the cost of premiums would come down. There needs to be a regulator in that industry since having insurance is a legal requirement.

    1. scottser

      I’m always confused as to why insurance companies pay out on fraudulent claims. If they know and can prove fraud then surely they have redress through the courts? It seems to me that their procedures are crap and they just take the lazy and dishonest option of passing their losses onto the customer.

    2. ollie

      There is a regulator. He ignored Quinn Insurance operating without sufficient reserves to pay future claims. Wee all now have to pay the bill of €1 BILLION.
      Take yet another bow Mr Neary, and enjoy your pension.

  2. boggo

    a lot of people in Ireland dont bother with insurance. they buy the car first insurance is an afterthought. one way of getting around it is to sign up for a monthly payment plan for insurance. the driver pays his first months premium then cancels the direct debit. they have a cert and disc which will be cancelled but if they are stopped at a checkpoint and have to produce their cert. the gardai will have to ring the insurance company to check its valid. most dont and according to the cert it is valid..My insurance is coming up this month and im dreading it.

    1. Fact Checker

      One should listen to Paddy O’Gorman on the Sean O’Rourke show. He visits district courts up and down the country and talks to those hanging about.

      There are vast numbers of (mainly) young men driving without insurance and/or without a licence.

      For their trouble they are fined. They all claim they will not pay the fine and face imprisonment instead.

      Imprisonment means a a trip in a garda car to the local jail (by appointment), a meal inside and then a bus ticket home. They don’t even stay overnight.

      It beggars belief.

  3. Max Bialystock

    There’s a lot to be said for the Australian system, where there is a flat rate for compulsory third party insurance, which is renewed at the same time as the roadworthy test and tax, and covers the car, regardless of who is driving it.

    1. The Real Jane

      Yeah, that sounds good. As Daly said, the real crisis will be when under insured or uninsured people are driving around because they can no longer afford insurance and can’t , from a practical point of view, give up their cars.

      If you can’t legally drive without insurance it should be possible for people to afford insurance. Anything else is just a nonsense.

    2. Rob_G

      Disagree; the reason that 18 year-old youngfellas are charged more than 45 year-olds is that there are actuarial tables which show that the first group causes more accidents that the latter.

      1. Andy

        Ah but sure a champion of all causes, Daly, knows more about risk weighting premiums than a gaggle of trained actuaries. Sure it only takes 575 to 600 points in the leaving to get into actuarial studies in UCD….

        1. Anne

          How many points does it take to figure out people are being gouged and there’s price fixing going on?

          And Claire Daly isn’t the only one with concerns –

          From the Times link –
          A briefing document, released under the Freedom of Information Act, shows scepticism within the Department of Transport about industry claims that premiums are rising because of rising compensation awards.

        2. Anne

          I’m just wondering too where were these trained actuaries before, when Quinn was in business?

  4. Anne

    I heard somewhere that car insurance companies are making a billion a year in profits.. so the excuse of an increase in claims to explain massively increased premiums doesn’t make sense.

    1. Rowsdower

      Go into any town in Ireland, the nicest buildings will be the bank or the insurance company, they didn’t get that way by paying what they’re supposed to.

      1. The Gawm

        They were originally built to look like they where here to stay. That’s why classical banking halls ape Roman architecture – they are trying to convey an air of permanence.

  5. Anne

    I don’t get why if something is compulsory, a billion a year in profits should be allowed..

    Like I’m supposed to by law enrich these greedy fupp sh*tes..

  6. Hurler

    All the people saying they would be happy with a flat cost need to consider what level that would be at. My insurance is in the region of €500 per year, increasing from €3-400 over the last few years. I have sympathy for people being put off the road by high charges, but this should be dealt with by regulation and forcing the companies to provide cover within pre-set parameters and caps, not by charging low risk drivers far more money to subsidise 18 year olds. Flat pricing is clearly unfair in the health insurance market, with the under 40s heavily subsidising olderpeople

  7. Anne

    http://www.claims.ie/23

    Last year, the Irish insurance industry made profits of €1.1 billion, which was over 40 per cent higher than 2003, according to the Financial Regulator’s annual insurance review, which was also published last week. Profits for the motor insurance industry increased by 30 per cent last year to €514 million.

    For last year, A billion profit in the whole insurance industry.. half of that approx going to car insurance companies..

    CTRL C, CTRL V.. I like verifying what I heard like that..

      1. Anne

        Can you find any up to date info on profits?

        Was just reading this –
        http://www.irishtimes.com/news/consumer/irish-motor-insurers-are-charging-more-to-boost-profits-1.2631682

        The motor insurance industry is raising the cost of premiums to “boost profitability” in the wake of the economic downturn, Minister for Transport Paschal Donohoe has been advised by officials.

        However, it continues, data from the Injuries Board to the end of last September “paints a somewhat different picture” from that set out by industry.

        Courts Service figures show personal injury claims initiated through the courts dropped in 2014 for the first time in seven years.

        The number of awards dropped from 1,699 in 2013 to 1,527 the following year

  8. Nikkeboentje

    If you want to know all about insurance cartels, come to Luxembourg. My car insurance here costs over €1,900 per annum. That’s with a full no claims bonus (you have to prove 12 years no claims here, I think in Ireland it’s usually 6 years). The exact same cover in Ireland would cost around €700. In Luxembourg, the insurance companies don’t care if you’re male or female, they don’t care about your age, they don’t care about where you live or if you have a garage. The only thing they care about is the car. Basically the car is insured, not the driver, meaning anyone is insured to drive my car as long as they have a full licence. The flip side is that my tax is only €140 per annum and diesel is only €0.92 a litre.

    1. mildred st. meadowlark

      Not just the mammies and daddies. It’s something everyone should be aware of when they get into a car. It’s a heavy lump of metal that is driven at speed. Carelessness could kill someone. Doesn’t matter how good a driver you are.

  9. Fact Checker

    If the Irish insurance market is so profitable why have we seen in the last 10 years:
    -Quinn Insurance go pop
    -Setanta insurance go pop
    -RSA Irish subsidiary need a massive bail-out from its UK parent

    There are lots of problems with the insurance market in Ireland but too little competition is not one of them.

    1. Anne

      They didn’t ‘go pop’ over an increase in claims, as being spouted by insurance companies as of late.

      1. Cloud9

        You have some cheek still posting on here after your laughable “facts”. The car insurance companies have not made profits here in years. And yes Quinn was hopelessly insolvent and run more like bookies.

        1. Anne

          There was nothing laughable about what I posted.. a billion profit in 2005. And I did hear that figure being mentioned recently on Vincent Browne, for last year..

          They were making profits, just not as much as they wanted to. They wouldn’t be here if they weren’t making profits… as put in the Irish Times article: Addressing the broader state of the market, it adds: “The question does arise for motor insurers – if motor insurance is so unprofitable why does anybody do it?”

          1. Cloud9

            Simplistic nonsense. Pmpa bust, setanta bust, Quinn bust, rsa bailout.. Check out fbd’s latest statements about the last few years List goes on but as usual lazy assumptions abound. “Mentioned on V. Brown” really? Loony lefties not even bothering to justify their positions anymore.

          2. Fact Checker

            In insurance people pay you lots of money today and you don’t have to pay it out for several years. In this respect it is the opposite of most businesses.

            Insurance in Ireland is VERY COMPETITIVE. I got a renewal on my home insurance recently – I rang them up and they dropped it 10% after I made up a quote from a rival. They don’t like losing market share.

            These firms I mentioned – Setanta, RSA, Quinn – kept prices low to gain market share. Unfortunately the claims down the road grew and grew and they went pop. This was failure by some combination of management/regulators/auditors.

            Any measure of ‘profitabiliy’ is meaningless unless it’s averaged over a VERY long period like 10 or 15 years.

            I stand by my claim that three wipe-outs in a market of ten or so firms in a decade suggests that it is NOT very profitable.

          3. Kieran NYC

            There’s also the fact insurance companies have to build up a greater reserve of capital under new EU regulations to make them more financially stable and prevent another Quinn situation.

            But these are just inconvenient facts.

          4. Fact Checker

            And that average claims are very high despite road safety being quite good, both compared to other jurisdictions.

            Like I said many things pushing up prices but a lack of competition is unlikely to be one of them.

            PS: Conspiring to fix prices is a crime. Any evidence of cartel-type behaviour can and should be reported to the Competiton and Consumer Protection Commission.

          5. Anne

            “Any evidence of cartel-type behaviour can and should be reported to the Competiton and Consumer Protection Commission.”

            Because you don’t have evidence of price fixing, doesn’t mean it’s not happening..

          6. Anne

            “Quinn – kept prices low to gain market share. Unfortunately the claims down the road grew and grew and they went pop”

            You’re suggesting it ‘went pop’ due to some massive increase in claims I don’t think that’s the case.. and it’s not the case currently either, per the Injuries Broad.
            Sean Quinn was siphoning money from Quinn insurance to some of his other companies to cover his gambles.

          7. Anne

            Just on this too –
            “And that average claims are very high despite road safety being quite good,”

            http://www.irishtimes.com/news/consumer/irish-motor-insurers-are-charging-more-to-boost-profits-1.2631682

            According to insurers quoted in the memo, “the average motor injury award made by the Injuries Board is very high at approximately €21,000”.

            The number of awards dropped from 1,699 in 2013 to 1,527 the following year.
            New claims
            The Injuries Board showed a “modest” 8 per cent increase in new claims for 18 months to the middle of last year, while in a 10-year period from its establishment in 2004 “70 per cent of personal injury claims are no longer litigated”.

            Speaking last September, the board’s interim chief executive Maurice Priestly said a “modest” increase in the number of claims was unsurprising in the recent economic upturn and the associated rise in activity.

            “However, what we are seeing are insurance premia increases in the region of 20 per cent, and further clarity is needed on the precise cause of increases of this scale.”

            21k x 1500 is about 31m.. Am I doing the math wrong there? 31 million on personal injury claims.. It can’t be that low, can it?

            2.5 million drivers approx in the country. Say those 2.5 million paid on average 400 euro, that’d be a billion euro.

          8. The Key of G

            So called fact checker is not the only one waffling here. Bait him with some claims about insurance companies being profitable however and he comes out with some gems like “3 companies going bust means it’s not making money”? Are you for real fact checker? 3 companies going bust in fact points to a ) litigious culture in which lawyers are encouraging claimants to settle rather than litigate irrespective of fault finding b) a ritual regulatory failure the likes of which allows the type of supernormal profits we see routinely being earned as quoted by Anne C) the likes of Cowboys like Quinn being hailed by some as good guys because the business is so profitable even complete ludramans like them can still make bucketloads

  10. Junkface

    Insurance companies in Ireland have way too much power over pricing structures. They have been extortionate for years! The government needs to Regulate them now, as they are taking the mickey really. Their excuses of an over litigious culture with regard to car accident claims is a total lie. The only reason the Insurance companies have not been severly regulated over pricing structures is because somewhere down the line the Government/ politicians/ golden circles are also profiting from this Extortion of the population. Otherwise why haven’t they stepped in long ago?

  11. Hurler

    The obsession with young people feeling they need to have a car to do anything with themselves is also a joke. Oh I need my car to get to work etc etc, if your job is less than 10 miles away, unless you have something physically limiting you you can easily cycle that in 30 mins, providing you with free exercise. If you need to go up to 30 miles, buy a scooter or low powered motorbike for a couple grand and insure it for a few hundred. Lower running costs and great hair at work are added incentives.

    If you live more than 30 miles from your job you need to move house or get a new job.

    Unless you live in the wilds of the west of Ireland you don’t “need” a car, especially if you are in the high insurance cost under 25 bracket. Since when did driving become an entitlement?

    1. Hurler

      Also, if you go dicking round on a bicycle or motorbike you will probably just kill yourself, which is fine. You dick around in a car brings the risk of killing other people into play.

    2. Fact Checker

      In Ireland housing is spread out but employment is clustered. It is the same in most of Europe but settlement patterns in Ireland (one-off housing, 3-bed semis with massive gardens) are particularly low density. This is not how I would have designed it but we are where we are.

      As a result a lot of employment in a lot of the country it totally dependent on access to a car. Motoring (excluding insurance) is already more expensive than pretty much anywhere else in the world.

      1. Anne

        “In Ireland housing is spread out..one-off housing, 3-bed semis with massive gardens”..This is not how I would have designed it”

        Massive gardens? What’s a massive garden now? Enough for a BBQ with a few friends to sit out and not have to sit on eachother’s laps? A bit of a rockery and a few shrubs to enjoy?

        We have low density, but lets have the few people we have here with the amount of space we have, cramped on top of each other for the sake of efficiency, is it?

        Viewing all aspects of life from an economic stance, instead of the socioeconomic impact is not a good way to view things.. People don’t do well socially, cramped on top of it each other with no amenities.. as you’re probably aware.

        1. Fact Checker

          I am perfectly ambivalent about your preferences over garden size.

          I live in an area with small gardens (including mine) and high population density. I don’t like spending time tending to a garden and I do like the (communal) amenities that high-density living supports.

          On aggregate the large gardens that characterise much of 50s and 60s Irish suburbia mean that distance to amenities/employment is increased.

          That is all.

          1. Anne

            You don’t seem like a man who enjoys a bit of nature for some reason.

            I’m pretty ambivalent about your preferences of garden size too believe it or not.. but you’re the one stating what’s too big. Massive you called them.
            A bit of space is good for people IMO. If you’ve to walk a few extra feet to get from your front door to the road, and it increases your travel time to work so be it.

    3. Anne

      We don’t exactly have the roads or weather for scooters or bikes.. but that’s a great suggestion that – move house if your job is more than 30 miles from where you live. Why hasn’t someone told this to all those living in commuter towns outside Dublin? Genius.

  12. Pip

    Cars have got sooooo much safer, ditto roads and drivers – you have nooooooo idea how ghastly it was say, 30 years ago. It all got stupidly cheap fairly recently, now we’re paying the price and they probably worked all this out in some nice hotel. Or golf course. Or massage parlour. I dunno.

    1. Anne

      But price fixing is illegal.. and if you have evidence of this being worked out in some nice hotel, please do report it.

  13. Jimi Ennis

    Just do what I did,

    move to a different country, moving to London reduced my insurance premiums by 80%

    if you move to New Zealand the cost of insurance is reduced by 100%, as its not mandatory, personal injuries are paid for out of a central pot thats paid for by the motortax (which is still cheaper than ireland)

    Irish people have been getting screwed for years, just leave if it pisses you off that much

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