Rising Motor insurance premiums is a phenomenon well documented by the, media and it is anticipated that they will continue to rise for the foreseeable future.
What is the cause of this increase in premiums?
The basic premise of insurance is that the insurer needs to be able to cover the cost of claims. Insurers in Republic have indicated that for many years premiums have been underpriced leading to many insurers reporting losses on their motor insurance businesses in 2014 and in previous years.
With the reported upturn in the economy there here has been a significant increase in road users in Ireland, the increase in traffic has led to a greater number of claims over the last 18 months exacerbating any losses for the insurers.
Insurers must hold greater amounts of capital to cover their claims with the introduction of the EU led “Solvency II” directive in 2016. Indeed, motor insurance requires more capital than other insurance products leading insurers to adjust their prices to cater for the minimum solvency requirements this year.
Arising from changes in Court jurisdiction limits in 2014 (lower Courts now awarding higher values), potential Injuries Board increases and the cost of more legal advisor intervention on behalf of claimants, these combined factors have led to customers being asked to pay more for motor insurance.
Effect?
It would appear for the foreseeable future customers will feel the pinch in their pockets arising from increased insurance premiums.