What is driving insurance claims through the roof?


CLAIMS Up 14 percent on 2014?Alan Murphy from Hastings Insurance Brokers. Pic: Conor McKeown

Áine Ryan

A whopping 113 percent increase in claims relating to uninsured or untraced drivers in Co Mayo is 96 percent higher than the national average. With the net national average increase in the first seven months of this year at 17 percent, Mayo came in with the fourth highest increase.
Roscommon recorded an increase of 500 percent (the number of claims rose from two to 12) while Longford and Leitrim both had an increase of 167 percent.
Hastings Insurance Brokers manger Alan Murphy told The Mayo News that, while speculative, it is reasonable to ask whether this dramatic increase ‘is linked to the soaring cost of motor insurance’.
“We have had instances of insurance companies quoting us €4,000 to cover a young, inexperienced driver, so, perhaps, this is leading them to take chances,” Alan Murphy says.
But what is driving this ever-increasing cost of premiums? While the answer isn’t a simple one, the ‘high frequency of claims’ and the relatively high cap on payouts are fundamental factors influencing the increasing costs. This then influences the competitiveness of the market, creating uncertainty for new companies which may consider entering the Irish market, Murphy explains.  
“On top of this, the Injuries Board process is not working the way it should be, given that 40 percent of rewards are being rejected by claimants and therefore moving into the legal process,” says Alan Murphy.
“The fact that in 2014, the cap for claims made through the Circuit Court was raised from €38,000 to €60,000 has influenced the number of claims, which are up by 14 percent since 2014,” he continues.
Take compensation for a whiplash injury, for example: “Whiplash injuries, which are soft tissue by nature, pay a minimum of €14,000 in the Republic of Ireland. In the UK this is a maximum of around €5,000. Some 80 percent of personal injury claims in Ireland are soft tissue. One insurer has called for whiplash claims to be banned and says we have the most expensive necks in Europe,” Murphy says.
He cites a recent Irish Times interview in which Fiona Muldoon, Chief Executive of FBD, made the following interesting comment: “You can either have high High Court awards or cheap insurance – you can’t have both.”
Another issue, he highlights, is the increasing incidents of fraud – people staging accidents. At a recent conference Murphy attended, gardaí gave examples of such cases where one car, for example, rear-ends another one and claimants move into the rear-ended car after the staged accident to make a claim for compensation.
Speaking about the David Fitzgerald, Chief Executive of the MIBI said, “Every year the MIBI (Motor Insurers’ Bureau of Ireland) manages thousands of claims against uninsured or untraced drivers. That is the role this organisation was set up to fulfil since we were established by the Government and the insurance industry in the 1950s.
“As a not-for-profit organisation all our claims are funded by the motor insurance providers operating in this country, with the costs ultimately covered by Irish motor insurance customers. On average, the MIBI pays out approximately €60 million a year for claims of this nature. We estimate that accounts for €35 within the cost of the average annual motor insurance premium.
“An [average] increase of 17 percent represents a significant jump in the number of claims being lodged. It showcases the increased pipeline of payments facing the MIBI. While no sums are yet attached to these claims, unfortunately more claims generally means higher levels of payments coming from the MIBI and ultimately, that will impact on motor insurance premiums.
“This is why one of the key objectives of the MIBI is to reduce the number of uninsured drivers on Irish roads. We are working with the Government, An Garda Síochána and other relevant agencies to help tackle this issue. These latest figures underline how important that objective is – not just for the MIBI but for all drivers operating in this country who are concerned about their insurance costs,” Mr. Fitzgerald added.

Did you know?
An insurance broker will shop around for the cheapest and most appropriate insurance policy, engage with the insurer if there is a claim and handle the process, and help clients alter their policy terms at the time of renewal or mid-term.