What's the news?
Most of you will have felt the pinch of spiralling costs of vehicle insurance recently, a worrying trend which shows little signs of stopping. The Cost of Insurance Working Group met today with Mr. George O'Connor, representative of The Car Rental Council of Ireland and Managing Director of Enterprise Rent-A-Car Ireland. O'Connor made no bones about the car rental sector's feelings on what is causing the current crisis: "Our insurance settlement pay-outs, in particular for soft tissue claims, are exorbitant and not in line with EU averages and as a result our car insurance costs are almost twice the average cost in most other EU countries."
He then went on to state: "Soft tissue injury claims, which account for 70 per cent of claims in Ireland, are exceptional in comparison to any other European country. On average, a soft tissue injury claim in Ireland will see a pay out of approximately €15,000 and, in reality, the figure can end up being significantly higher. In France, Germany and Spain, for the same accident and same injuries, the average pay out would be capped at €3,000 and up to €5,000 in the UK. It is clear that our exorbitant pay-outs are having a direct impact on our spiralling motor insurance costs on the average motorist. If we don't address the core issue of ballooning claim payments, risk liability will continue to cripple businesses in Ireland."
The Cost of Insurance Working Group is comprised of members from The Department of Finance; The Department of Jobs, Enterprise and Innovation; The Department of Justice and Equality; The Department of Transport, Tourism and Sport; The Personal Injuries Assessment Board; The State Claims Agency; and The Central Bank of Ireland, and O'Connor recommended that the Working Group should focus on a "care not cash" solution in order to stem the tide of large cash pay-outs for soft tissue claims, and instead facilitate the provision of proper medical care for this type of injury.
He finished by saying: "Too much money is being paid out, too easily, that's the bottom line. It opens the market to fraud because it is known that there's a good chance the system will pay handsomely. That's what's happening and the longer it goes on, the more insurance prices will continue to rise. We must benchmark our soft tissue claims in line with EU averages and focus on ensuring we have a concrete but FAIR payments system. If we achieve this we would discourage fraud, we would alleviate pressure for insurance companies, create further competition and ultimately we would reduce the costs placed on the consumer." O'Connor is also adamant in the belief that the soft tissue claim phenomenon and insurance market as a whole is a much bigger concern for the car rental industry than Brexit.
More on this story as and when it develops.