The latest CSO stats have revealed that the cost of motor insurance has surged by just under 27% in the past 12 months.

This is compared to all other forms of insurance at an increase of 6½%.

Why are we seeing such massive increases in motor insurance? Is the trend likely to continue? What does it mean for consumers and businesses?

Those were just some of the topics explored in this week's Industry Review on Down to Business, which focused on motor insurance.

Vincent Wall was joined by Conor Faughan, Director of Consumer Affairs at AA Ireland; Pádraig Lynch, a Director with Chill Insurance; and Brian Butterly, who is the Sales Manager with First Ireland. 

Pádraig started by explaining "essentially what's happened is, between 2003 and 2013, car insurance premiums have reduced by 47%. There was good stuff happening... [but then] really intense competition came in, and insurance companies focused on market share. Quite clearly they have driven the price down to a level which is not sustaniable".

He pointed out that in 2014 in car insurance alone, insurance companies lost €175m. They are now attempting to get pricing back to a level where they can receive a return on their capital - which is naturally driving the premium prices upwards.

Brian agreed companies "were focusing on numbers rather than the actual amount of money they were bringing in versus the amount of money they were paying out".

He added that unfortunately the fluctuating prices for customers are 'very common'. "Like the housing crisis, prices go down, prices go up. It seems to be very similar in the insurance trade. They all follow a cycle".

Conor had some very strong words on the subject, suggesting that "collectively the insurance sector has acted foolishly. They did underprice, that is part of what is going on".

However he added it's important to understand what the 'real prices' of insurance are. He said that ideally it "should just be the cost of compensating victims", but he suggested that in Ireland "there's so much waste".

He highlighted €200m a year in legal fees, which he calls an 'unnecessary burden' for punters to pick up. He also observed that "fraud is rampant".

"Insurance prices may need to go up, because of an element of correction. But we do not need to pay for waste. We do not need to pay for fraud. We do not need to pay for lawyers", Conor argued.

You can listen back to the full Industry Review via the podcast below: