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Long
suffering Irish Motorists should be put out of their misery by the Government.
Details
contained in the Department of Enterprise, Trade and Employment (DETE)
Working Group Report on Personal Injury Compensation just released graphically
illustrates the extent to which the Irish motorist are being ripped off
for car insurance. "Less than half of the money collected in premiums
actually find its way back to injured parties. The rest is eaten up by
the insurance companies in administration charges, legal costs and other
"experts" who are making a tidy living of the backs of people
misery" said Mick Murphy the National Organiser of MIJAG, the Motor
Insurance Justice Action Group.
Highest
Insurance in the World
The report shows that in the case of the majority of claims, those
under £15,000 that two thirds (64%) of the cost of these claims
is taken by the various professionals and experts and in larger claims
just under half (47%) is eaten up in this way. The norm throughout Europe
is 10% and in Sweden it runs as low as 2%. In Sweden the vast majority
of cases are settled following one written submission to a Government
Board. The report shows that motorists in Ireland pay more for insurance
than anywhere else in the world. Relative to earnings we pay 4 times more
than Swedish drivers. "The report recommends the setting up of a
Personal Injury Assessment Board similar to the system used in Sweden,
which MIJAG would welcome" said Mr Murphy. "However the Swedish
system is in existence since 1936 and grew up with the car. The same system
here would have to prove itself before people will move away from using
the courts and would need to be kept simple like the Swedish system"
Mr Murphy added.
"The
situation for young drivers has no close comparison anywhere else in the
world. All New Zealand drivers pay £40 per year extra for car tax
and 2% on the cost of a gallon of petrol to cover the cost of Insurance.
Young men in Ireland are being asked to pay over £4,000 and most
simply do not pay and do not drive cars. The Government must introduce
a scheme here for young drivers. They should be charged the average premium
of £480 and until they have proven safety related driving offences
that should not change". Mr Murphy said.
"The
one thing that is very clear from the report is the system in any one
of the many other countries studied would be a big improvement on the
system here with the Swedish, Quebec or New Zealand models being far superior
in every way. If the Government is serious about tackling this issue it
has no shortage of options to choose from" Mr Murphy added.
Attached
is a summary of the DETE Report prepared by MIJAG.
Summary of DETE Report.
The
following are some facts contained in the report, which is available at
the Department web site http://www.entemp.ie/publications.htm.
The Report is also available from the Department at 01-6312724.
Two
Thirds (64%) of the cost of motor insurance payouts in Ireland is legal
and administration in the majority of claims i.e., those under £15,000
and 47% in larger claims. In most European countries it is 10% in Sweden
it is 2%. In other words the majority of insurance premium revenue is
eaten up by insurance industry administration, the legal profession and
"other experts". This is by far the major factor in the cost
of motor insurance in Ireland and not the accident rates which stand at
the European average according to the National Roads Authority. As if
to emphasise this point, Ireland (20.3 deaths per 100,000 Population)
has less than half the road death of Portugal (43.2 deaths per 100,000
Population) but Ireland has much more expensive Motor Insurance. (Source:
- DETE Report page 8 plus NRA report Young Driver Accidents 1997).
The
English system is virtually identical to the Irish system, yet barristers
get involved in half (48%) of all Insurance claims in Ireland and only
3% of cases in the UK. Claims in Ireland take 3.6 times longer to settle
and are far more likely to wind up in court than in the UK. 60% of Irish
cases are settled in court, 60% of UK cases are settled over the phone
or through correspondence, i.e.: - without even a meeting. On average
claims in the UK are one quarter the amount of a claim in Ireland. (Source:
- DETE Report page 11 and Deloitte and Touche Page 75).
In
Sweden people can take their case to court but rarely do. The Road Traffic
Injuries Board (RTIB) was set up there in 1936 and its findings are accepted
in the vast majority of cases. Insurance in Sweden costs 0.9% of average
earnings compared to 3.7% in Ireland, i.e. Four times higher in Ireland
which has a lower car density than Sweden. The cost of Insurance in Sweden
has been going down in recent years. Premiums dropped 9.6% between
1992 and 1997. The RTIB do not take evidence from "experts",
and only one written submission from both parties is considered. As mentioned
the costs in this system are only 2% of premiums. (Source: - DETE Report
pages 24,25,26,65,66)
The
motor insurance scheme in Quebec province in Canada is funded 63% from
vehicle registration tax VRT, 18% licence fee and 19% from fuel tax. An
efficiently run scheme in Ireland would cost approximately £500m
instead of the current £920m and would cost only one pound out of
every seven paid in the £3,500m of motor related taxes in this country.
In other words motor insurance as we know it could be done away with and
replaced with a whole new system paid for from the huge amount of taxes
that are currently being paid by ordinary motorists. (Source: - DETE Report
Page 20).
New
Zealand has a one scheme run by the Government (Accident Rehabilitation
and Compensation Insurance Corporation or ACC) to cover all kinds of personal
injuries. In the case of motoring there is a 2% tax on Petrol and $80
(£40) a year is added to the Car Registration Tax. Based on the
1997/98 annual report 10% of the Schemes turnover pays for legal, administration
and other operating costs. This is similar to the running costs of the
insurance institutes in Germany or the Danish insurance firms according
to the report. (Source: - DETE Report Pages 89,90)
Irish
People pay a higher percentage of their earnings on motor insurance than
any other country in the world. On top of that young drivers in Ireland
pay 4.8 times the average insurance premium paid here. There is no international
comparison to the treatment of young drivers in Ireland. (Source :- DETE
Report page 19 and MIJAG e-mail research of its supporters).
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