Did you know that there was an increase of 16% in the last 12 Months for Car insurance? That’s quite a jump and drivers are being warned that premium rates will keep rising in 2015. This increase has taken place as a result of insurance companies competing in a price war which left them making losses. Something had to give and one of the main domestic insurers saw its shares fall by 9pc on the Irish Stock Exchange yesterday after it warned investors that the insurance market “remains challenging”.
Car insurance premiums rose by 2pc in the month of April, but rates are now up 16% for motor insurance compared with figures a year ago. This is bad news for motorists who paid an average premium of €500 in 2014 compared with this years average premium at €580.
It is younger drivers who are being hardest hit by the higher cost of getting cover. This has happened because insurers have been hiking premiums for months now after a failed price-war led by RSA Ireland and its online operation 123.ie meant they sold policies too cheaply, and did not put sufficient reserves aside to cover claims.
One main domestic insurer said yesterday it was cancelling its dividend to shareholders. Its share price fell sharply after it said it had lower premium income in the first three months of this year.
Another leading insurer warned drivers to expect premiums increases of up to 20pc this year. He said more traffic on the roads mean more collisions.
Insurers have also found that the cost of settling claims is rising due to more people using lawyers to make claims.
The problem stems from insufficient funds being set aside for reserves and it is the car owners who are going to have to make up the shorfall.