Motor insurance premiums are expected to go up in Ireland this year due to a rise in claims.
On The Pat Kenny Show today CEO of the Royal Irish Automobile Club (RIAC) Conor Faughnan said this is to be expected as premiums had declined for five years during a period of "very high" inflation.
The transport commentator said the current hike is likely due to repair costs associated with new cars rolled out on Irish roads in recent years.
“The costs of repairing sophisticated modern cars that are now full of sensors is much more expensive,” said Mr Faughnan.
“Previously if I knocked your wing mirror off, I would say I’d sort you out directly, not bother with the insurance company, thinking it could be €600 or €700.
“Now it could be in the thousands and I have to make a claim for it so the insurance companies are getting a lot more material damage claims to process.”
A motor insurance certificate with a car key in August 2011. Picture by: Brian Jackson / Alamy Stock PhotoMr Faughnan said the shift towards electric vehicles in Ireland is another factor.
“EVs appear to be expensive to repair and that is starting to turn up in the data,” he said.
“With some brands and certain parts; if damage is done to an EV, it is off the road for longer.
“If an EV is off the road for three or four weeks, whereas your diesel is off the road one week, that’s an additional few weeks’ car hire your insurance company is having to pay.”
Expected change
Mr Faughnan said people could not have expected insurance to stay low forever.
“We need a basic reality check,” he said.
“Prices came down for five years in a row while every other bill we had was going up sharply – that was never going to last forever and it does look like the party is over.
“Very roughly it seems to follow a seven-year cycle.
“You’ll get a phase when insurance companies are competing for business.
“Then you’ll get a phase when claims costs are catching up with the marketing costs and the money you spent acquiring a book of business last year is now the money you are paying out in claims.”
Deals
The RIAC CEO said it is still possible to snag a deal on your insurance.
“When you get your renewal document, go to the trouble of getting those quotes, kicking your existing insurer on the shins and see if they can improve things,” said Mr Faughnan.
“Generally, you will get something to your benefit by doing that but, unfortunately, the long-term trend of premiums coming down appears to be over.”
The total cost of motor insurance claims in Ireland was €751 million in 2022.
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