Insurance market set for more turmoil
We blogged recently about the car insurance review and its far-reaching implications for the Irish market.
The turmoil shows no sign of slowing down with the demise of Enterprise Insurance directly affecting 14,000 policy holders.
One might argue that the single European market has played a role in destabilizing the insurance market here.
In 2014, Setanta Insurance went bust leaving 80,000 customers in the lurch and an ongoing legal battle over who foots the bill.
What Setanta (Malta) and Enterprise (Gibraltar) have in common is they were regulated by smaller European countries but sold directly into Ireland.
Picking up the insurance bill
It appears these countries don’t have a compensation mechanism, ensuring pressure will come on the industry to pick up the bill.
And by ‘industry’, of course we mean ordinary policy holders.
This is particularly galling as the Irish regulator had no hand or act in overseeing what was going on with the companies in question.
Enterprise Insurance, with other businesses in France, Greece, Italy, Norway and the UK, announced they were going into liquidation on Friday last.
While the company has not made an official statement, the Gibraltar authorities have indicated that they plan to pass the cost burden on to the compensation funds in the other countries.
Which means the costs will ultimately be borne by Irish customers – and the cost of premiums will once again rise.
Recent updates include the Department of Finance’s proposal (published 22 June) stating that in future, the Insurance Compensation Fund should cover liquidations.
How this works is essentially a loan from the exchequer that the industry pays back over time (again forcing rising costs onto the customer to meet the balance).
This has all the hallmarks of a short-term fix.
Now more than ever it seems only fair that we internationally benchmark awards as has been called on by industry leaders here.
On the one hand we are being forced to pay out whiplash claims three times higher than UK and EU averages.
On the other hand we are subjected to EU common market pitfalls which allow companies such as Setanta and Enterprise Insurance to dump their failings in our lap.
This has to be addressed, and fast, as ordinary motorists, the business community and our tourism sector continue to feel the pressure of this escalation.
In my original blog, I mentioned that I was looking to renew my own policy. Well, €760 later I am now fully insured. (No accidents, no penalty points.)
Just two years ago my policy cost me €400. Ouch!
Like myself, businesses are feeling the pinch but the difference is it is affecting their whole livelihoods.
Companies that depend on insurance – taxi drivers, car rental companies, haulage firms – cannot compete and they certainly can’t expand amid this volatility.
How much longer before normality returns?
If you are an Enterprise Insurance customer you can get more information about your policy from Wrightway Underwriting on +353 53 91 67100.
Aideen Ginnell is a Senior Client Executive with Cullen Communications, specializing in Public Affairs