Motorists advised to challenge renewal costs

MOTORISTS HAVE been advised to challenge their insurance companies on policy renewal costs, after it emerged that some companies are charging “service charges” of 18 per cent, on top of annual increases as high as 14 per cent.

Earlier this year, insurance companies Quinn Direct, Hibernian Aviva and Axa announced renewal premiums would rise in 2009 – because of increasing claims – and by next month car insurance premiums will have risen by up to 14 per cent, according to the Consumers’ Association of Ireland.

This is against a fall in prices generally in the 12 months to June of approximately 5 per cent. In addition to the premium increases, some insurance companies are adding charges to motorists who opt to pay monthly by direct debit.

In a typical example of the increases seen by The Irish Times, Allianz Insurance quoted a hike from just over €545 to €622. On top of this, the company said payments by direct debit would incur service charges of about €50, equivalent to an annual percentage rate (APR) of 18 per cent.

While the increases have been attributed to rising costs, last year was one of the safest on record for Irish motoring, with the lowest number of deaths since records began in the 1959. The Irish Insurance Federation (IIF) said the policy cost increases were because of higher claims costs and insisted there was a higher frequency of claims, despite garda statistics.

In addition it defended the additional charges for direct debits, claiming they posed an additional administrative burden.

A spokeswoman for the National Consumer Agency said the rises and charges were not a matter for that body and referred calls to the Irish Financial Services Regulatory Body (IFSRA). However, IFSRA said it did not have responsibility for the charges. Questioned about “equivalent” interest rate charges as service charges, a spokeswoman said additional information would be forthcoming. However, this was not available at the time of writing.

The Consumers’ Association of Ireland described the price rises and service charges as “outrageous”.

It has called on the Tánaiste Mary Coughlan to intervene.