It's the great motor insurance rip-off - Evening Herald (3/Oct/2001) - Dan White The motor insurance industry is softening us up for yet another massive price hike. If the insurance companies get their way we will be soon paying 20pc more for motor insurance. How justified are these increases? When it comes to playing the poor mouth, nobody can beat the motor insurance companies. The farmers and public service unions are in the tupenny ha'penny class in comparison. Last week the motor insurers were at it again. According to the Irish Insurance Federation (IIF), the insurance companies lobby group, the insurance companies are making massive losses and we are going to have to pay a lot more for motor insurance. With all due respects to the IIF, that's rubbish. Underwriting "losses" are nothing of the sort. They are merely the difference between the amount the motor insurance companies take in by way of premium and what they pay out in claims. However, anyone who has claimed against an insurance company after a motor accident will testify, it can take years to get paid. It is not unusual for claimants to wait five years or more. As a result the insurance companies have the use of the money which they take in premiums, and the investment returns which it generates, until the claims are paid. This means that the so-called underwriting "losses" are no such thing. Motor insurance companies, surprise, surprise, make healthy profits. For anyone who had any doubt, the recently released report of the Motor Insurance Advisory Board (MIAB), which was set up by the Government to examine the whole issue of motor insurance, showed that motor insurance companies, far from losing money, are in fact highly profitable. Not alone are they highly profitable, but younger drivers, whom the insurance companies have long accused of being a bad risk, are in fact their most profitable customers. According to the MIAB report, insurers made an average profit of £211 per head on drivers aged 22-24 between 1993 and 1997. This compares to just £60 for drivers aged 46 to 55. While the insurance companies have claimed that the MIAB estimates are inaccurate, they have yet to publish a convincing rebuttal. Last week's performance from the motor insurance companies was a classic. Everything, including the recent terrorist attacks New York and Washington, was trotted out to justify an insurance price increase. All I can say is that in all the times I have been to New York I have yet to see an Irish registered car there. If the events of September 11 are to be used as a justification for a hike in motor insurance, then I think we should be told how many Irish-registered cars, their drivers and passengers were in New York and Washington on that dreadful day. Motor insurance is a Government-created monopoly. You cannot take a car onto a public road without motor insurance. Do, and you run the risk of going to jail. That's a potent incentive to take out motor insurance. Not alone has the Government made it illegal to drive without insurance, the number of companies offering motor insurance, has declined dramatically in recent years. Just three companies, AXA, CGNU and Allianz now control a massive 60pc of the Irish motor insurance market. Of course, the insurance companies aren't the only problem when it comes to the cost of motor insurance. A judicial system which seems to attach more importance to the interests of the legal profession than the needs of drivers doesn't help. The IIF estimates that legal fees account for a massive 42pc of the cost of claims. Back to Media Index