The decision by Guardian PMPA to cut motor insurance costs by up to ten per cent will come as some welcome good news for the beleaguered Irish motorist. The reductions signalled by Guardian will hardly produce anything like the cheap and flexible insurance cover available in Britain it will still cost a 50 year old driver with no claims about £450 to insure a family car but some progress in being made. In real terms, the cost of motor insurance has stabilised and may have even declined in the past five years.
The hope must be that the competitive pressures within the industry will help to continue the downward spiral. In recent years the banks, the building societies and other financial services have had their once comfortable existence rocked by a healthy dose of competition in the market place. Similar competitive pressures in the motor insurance market can only benefit the average motorist.
Guardian, who insure some 40 per cent of private motorists, has demonstrated how these competitive pressures are intensifying in the motor insurance sector. But motor insurance costs in Ireland still remain out of kilter with Britain and the rest of Europe. The evidence assembled by the Automobile Association and the Society of the Irish Motor Industry (SIMI) suggests that car insurance costs in Ireland are nearly twice the EU average and British average.
The case for cheaper insurance can be made not just in the interests of the consumer but also to serve the wider needs of society. The existing situation in which an estimated one in six of Irish drivers have difficulty securing affordable insurance cover is extremely disturbing. The cost of insurance for younger drivers, in particular, remains at prohibitive levels and must help to explain if not excuse the worrying number of uninsured drivers on Irish roads.
The path to cheaper insurance, however, remains strewn with difficulties. Indeed the Minister of State for Consumer Affairs, Mr Rabbitte, has felt obliged to order an independent evaluation of the factors contributing to the high cost of motor insurance. The insurance industry here argues that it must contend with a more difficult trading environment than its British and European counterparts with a higher number of drivers' claims, more generous court awards and a more expensive legal system. Irish insurance companies also maintain, for example, that the average claims cost can be up to four times higher in Ireland than in Britain although it must be said that the motoring organisations have questioned many of the statistics put forward by the industry.
That said, few would differ from the view advanced by one Guardian executive yesterday that fundamental legal changes are required before the Irish motorist can expect British type insurance rates. To date, the introduction of non jury courts for personal injury cases, the road safety and drink driving campaigns have all failed to produce substantial dividends for the motorist. It is to be hoped that the report ordered by Mr Rabbitte can break the deadlock.