This is less of an informative blog but rather a general rant over the state of affairs in the insurance industry in Ireland.

I heard an ad on the radio this morning from BlueInsuance.ie (free backlink there, it’s well deserved for inspiring this rant) – basically offering a 2-year policy where they guarantee your premium will not rise in the second year. Firstly, it’s a brilliant retention tactic to keep people and no doubt everyone else will be offering it soon. Secondly the terms and conditions are fantastic “we are unable to provide a 2-year quotation for persons who are either under 25 years of age, or who holds 6 or more penalty points, or with a vehicle aged more than 10 years old (or an import more than 4 years old)” – I’ll get to the import point in a second!

But annoyingly, there was a time when a person’s insurance premium would decrease over time. So a driver with more experience, no claims bonus, who I’d imagine becomes less of a statistical risk – gets a lovely guarantee that the premium won’t go up in the second year? SHOULD IT NOT BE GOING DOWN?

How is this based in any way on risk? Of course the kickback is that prices are going up across the board – of course they are when the industry as a general behaves like a monopoly – one hikes prices, everyone follows (more on that below) – but why are prices increasing?  Did people wake up and start crashing more in the last year? Higher cost of repairs? More claims in the last year? – actually on that point – all told 80 per cent of motor injury claims in the Republic last year were for whiplash, the associated payout with such claims are well out of step with EU norms. In Ireland the average award for whiplash is €15,000, in the UK, the corresponding figure is €5,000.” In Spain and Italy the average payout for such a claim is around €2,000. Is it to ourselves that we should actually point the finger of blame for adopting such an unpalatable claim culture? Or is it coincidentally related to the upturn in the economy where you can get away with it? If someone genuinely knows – please comment below.

And the worst part is, insurance is a mandatory product, you have to have it. Industries like this is where you need the most regulation to protect the consumer. Where’s the financial regulator? Or even competition regulator or authority? Or whoever is meant to be looking after this. Sometimes its genuinely hard to tell whether there’s a number of private companies running the show or it’s one big company running a massive monopoly. Seriously though, one insurance company starts a random policy and everyone follows.

Like the whole idea of no cars over 25, then 20, then 15 years old? Seriously 15? This is now a general policy from most companies. But 15 years is 2001 – the year which was the turning point in standards of safety with the Renault Laguna becoming the first 5 star NCAP rated car – and then in general most follow suit. So in the next couple of years you’re going to have cars that are 5 star rated for safety which have a certificate of roadworthiness (NCT) being difficult to insure? How does this make sense? And what is the point of the NCT if insurance companies don’t believe it’s worth the paper it’s printed on?

laguna

But that was at one point a policy adopted by one – much like the whole imported cars policy – which is now adopted by most. For what reason is an imported car more expensive to insure? In certain cases with for example Japanese imports I can understand the higher risk with parts in cases being difficult to get etc. But cars imported from the UK get the same penalty from a lot of insurers now. How is the exact same BMW 3-series first registered in UK a higher risk than one first registered in Ireland? It’s the same car, made for the same market! Funny how an Irish BMW dealer could purchase a new car from the UK – register it here first time and its Irish – but guess what? THEY COME FROM THE SAME FACTORY! Why is there an increased premium – or even in blueinsurance quote above “vehicle aged more than 10 years old (or an import more than 4 years old)” – why is the policy only up to 4-year-old on imports? Other than a handy way to increase premiums which everyone has adopted – I don’t see the logic.

Genuinely it’s as if it’s all one big company running the show. Ryanair were not able to buy Aer Lingus over competition when theirs is many, many airlines flying in and out of Ireland with widely varying price points and services. Fair play competition people, but on the ground in insurance – is there a StoneCutters society where the heads of all the insurance companies in Ireland sit down together to decide policies (maybe a tad paranoid there) but genuinely what is the difference from one to the other? A few euro and the logo over the door?