Plan to make companies explain motor insurance increases

Insurance companies will have to explain why they are increasing motor insurance premiums and will have to provide extra information on how premium costs are calculated, a Government report on the sector will recommend.

The report on motor insurance is expected to recommend that companies show the cost difference between annual premiums and explain price increases to customers, if there are any.

Eoghan Murphy, Minister of State for Financial Services, eGovernment and Public Procurement, will launch the report in the coming weeks in an attempt to tackle high motor insurance costs, but will outline some of its recommendations in a speech at an insurance conference on Friday.

Mr Murphy will say one of the areas of the report “relates to consumer protection”.

“It seems clear to me that we need better and more pro-active information on the part of insurance companies when quoting for insurance or renewing insurance. Information around how a person’s premium has been calculated, the reasons behind changes year-on-year, and so forth.”

On Thursday, The Irish Times reported that the Government would also set up a new commission on personal injury claims in an attempt to bring insurance payouts following car crashes into line with international standards. It is hoped lower compensation payments will lead to reduced motor insurance premiums.

Soft-tissue injuries

The personal injury commission will particularly focus on payouts for soft-tissue injuries, such as whiplash, which have risen substantially in recent years.

Whiplash accounts for up to 80 per cent of all motor insurance claims, with payments ranging up to €19,400 for minor cases where there is full recovery within about two years. The comparable payment in the United Kingdom is a maximum of €7,600.

For severe whiplash cases, the Irish compensation payments are up to €77,900, while the corresponding UK figure is €24,244.

On Friday, Mr Murphy will say there is a “claims culture” in Ireland when it comes to minor injuries. “We have to face up to that too. We cannot continue to be outliers here. The vast majority of us are in the middle and we are bearing the costs.”

He also proposes increased use of automatic number-plate recognition and a new register that would see insurance companies publish anonymous details of all of their payouts.

It is understood there will also be legislative measures to combat fraud and increased penalties for uninsured drivers. The plan will cover nine areas, with a commitment to introduce measures within a certain timeframe.

Mr Murphy will, however, warn that the Government cannot “set the price of a premium”.

“This needs to be done by the insurer based on perceived risk. We cannot set the award level for a claim. This responsibility falls to the judiciary. But we can introduce reforms that will speak to the many factors that contribute to the costs of premiums.”