A comprehensive report on motor insurance costs has found that the motor insurance industry here makes profits that are proportionately almost ten times higher than they are in the United Kingdom.
The report by the Motor Insurance Advisory Board blames insurance companies and the cost of litigation for the high price of motor insurance.
It also blames successive administrations for failing to tackle the problem. The report's 67 recommendations will now be examined by a working party.
Critics have blamed the surge in premiums on the lack of competition here but the industry has pointed to high legal costs, which it says accounts for more than 40% of an average claim.
The Irish Insuranace Federation welcomed today's report. In particular, it welcomed the findings that the core issue was the cost of claims.
Responding to the finding that the industry was making profits almost ten times higher than its European counterparts, the federation said this was like comparing poor with very poor. Its spokesperson Martin Long said that when all forms of income were taken into account, the industry was making a loss of £130m per year.
Among the report's more important recommendations are:
Legal sector
1. A framework independent of the Court system be established to inform the public on legal fees.
2. All legal advertisements should point out that solicitors are not entitled, under Law Society rules, to a percentage of a compensation award.
3. Fraudulent and exaggerated claims should be punishable by law.
4. Lump sums should be replaced by guaranteed annual payments.
5. The Small Claims Court system to be extended to claims under _6,350.
6. Information on claims levels to be collated to help with early settlements.
7. Competition Authority's current investigations should take into account a review of the effectiveness of self-regulation of the legal profession.
Insurance sector
1. Insurance companies must state reasons for refusal of cover in writing.
2. Renewal notices to be sent a minimum of 15 working days before expiry to allow customers to 'shop around'.
3. Legislation to ensure cover cannot be refused on age alone.
4. Competition Authority should review further mergers in the insurance industry on the basis on its impact on consumers in Ireland. The Competition Authority should also review the whole area of motor insurance.
