Non-insured drivers force up premiums by as much as 7%

Law-abiding motorists are paying 6 to 7 per cent extra in insurance premiums to cover the cost of claims against uninsured drivers, an Oireachtas committee meeting heard yesterday.

According to the Irish Insurance Federation (IIF), the cost of covering uninsured claims adds about €45 to the value of an average policy.

IIF chief executive Michael Kemp told the Joint Committee on Enterprise and Small Business hearing on insurance reform that there were 13 recommendations in 2002's Motor Insurance Advisory Board Report that it believed could substantially reduce premiums, but five of these had not yet been implemented.

One of these was that the proceeds of fines for uninsured driving should be assigned to the Motor Insurers Bureau of Ireland (Mibi), the industry body responsible for handling claims from victims of uninsured drivers.

Mibi, which is funded by the insurers, paid out €70 million in 2003 to victims of accidents involving uninsured, hit-and-run and foreign motorists.

This cost is passed on to policyholders, but the IIF argues that it could be reduced if fines for uninsured driving were redirected to Mibi.

Existing deterrents against uninsured driving include five penalty points for being caught driving while uninsured, fines up to a maximum of €3,000, up to six months' imprisonment and the impounding of vehicles. However, the measures have not been enforced as stringently as they should be, according to the IIF.

In practice, fines tend to be at the lower end of the scale, amounting to a few hundred euro, Michael Horan, the IIF's non-life insurance manager, told The Irish Times.

The chairman of the Oireachtas committee, Donie Cassidy TD, said the number of drivers that were uninsured gave the committee enormous concern.

"People with a no-claims bonus for 10 or 20 years are, we understand, being charged 10 per cent extra in order to cover the cost of claims involving uninsured drivers," Mr Cassidy said.

Mr Kemp said the additional amount paid was 7 per cent or slightly lower: "There is certainly no question of profiteering as a result of uninsured drivers."

It is estimated that 4 to 5 per cent or about 60,000 to 80,000 of the vehicles on Irish roads are uninsured, and Mr Kemp called on the Garda Síochána to undertake a fresh study.

On a recent visit to the US, committee members examined the use of scanning devices by the New York Police Department to detect if vehicles were uninsured.

Mr Cassidy said yesterday the committee felt at least another 20 per cent in the reduction of premiums could be achieved through the enforcement of road safety law and other measures.