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Have motor insurance rates reduced?

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4 years ago

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By John Healy of Healy Insurances

The cost of motor insurance in Ireland is a well-documented topic over the past number of years. Have the increases plateaued and are reductions on the horizon? Firstly, we need to know how we got here.
The average car insurance premium in 2013 was €435. Now compare this to 2019 when it hit an average of €706.

There are a myriad of reasons for the rate increases including higher claims costs. In 2014 the limit for personal injury awards at circuit court level was increased from €38,000 to €60,000. This level of claims inflation was felt across the insurance market and was immediate. This increase did not grab national headlines and was hardly commented on outside the insurance industry at the time.

In 2015 the average circuit court award increased by 21.2% following a 13.5% increase in 2014. The upturn in the economy at this juncture led to increased traffic and consequently higher levels of accidents and claims. The average whiplash claim in Ireland stood at €15,000 compared to €5,000 in the United Kingdom.

Insurer Failures

We should recall that the insurance industry witnessed a number of insurer failures in the past number of years including Setanta, Enterprise and of course the collapse of Quinn Insurance for which consumers are still paying a 2% levy every year. Some of these failures no doubt resulted from unsustainable pricing when the claims environment was getting considerably more difficult. The EU enacted Solvency II legislation in 2016, which required insurers to hold increased capital levels to protect against the risk of insolvency. It is also likely that it hastened the withdrawal of smaller niche insurers from the Irish market.

Government Actions

Insurance has been a hot potato for Government for many years. In late 2019 the Government enacted legislation to increase the timeframe for issue of renewal notices from 15 to 20 days. There was also a multitude of extra information to be included. Any consumer who has purchased motor insurance will have noticed the massive increase in the documentation over the past year. Does this lead to lower premiums? Even an EU former chair of a regulatory institution, Gabriel Bernardino, has recently acknowledged the problem in saying “too much information kills information” and that consumers are not reading documentation received.

Insurance Cycles

The insurance market experiences cycles of expansion and contraction. An expansion is referred to as a soft market and will result in reduced premiums, more competition, and increased capacity from insurers to write business and a scramble for market share, sometimes below profitable levels. A contraction is called a hard market and typically results in higher premiums, less completion and capacity to write business, and withdrawal of insurers from sectors. While the profits of motor insurers can be in the millions it is perhaps more reflective to note that their combined operating ratio (underwriting margin in other words) is often at 5% or lower.

Is Ireland entering a soft market for motor insurance premiums?

According to Insurance Ireland, a representative body, there have been reductions of 9% in 2019 with a further 6.5% in 2020. According to the Central Bank, the average premium at the end of 2020 was €653. For comparison purposes, the average comprehensive car insurance in the UK was €882 in the last quarter of 2020 and in France, the average cost is between €700 and €900 depending on regions.

The new personal injury guidelines will have a positive impact on premiums but this will take time to wash through the legal system. COVID-19 has certainly meant much reduced traffic on the roads and this should feed into lower claims and thus lower costs.

At Healy Insurances, we surveyed over 120 of our customers over the month of May and found that the average year on year car insurance reduction was 15% from 2020 to 2021.
The current reductions on rates are likely due to the benign claims environment over the past year rather than the changes to the personal injury guidelines.

The question is; will reductions continue as the economy continues to reopen and emerge from the pandemic?

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Cost of agricultural land set to increase by 8% this year

By Ted Healy of DNG TED HEALY The results of a survey on agricultural land values conducted by the Society of Chartered Surveyors Ireland (SCSI) was published earlier this week. […]

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2 years ago

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1 May 2023

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By Ted Healy of DNG TED HEALY

The results of a survey on agricultural land values conducted by the Society of Chartered Surveyors Ireland (SCSI) was published earlier this week.

It predicts an increase in land values by an average of 8% this year and an increase of 14% on average in rental values.

The report titled, ‘SCSI/Teagasc Agricultural Land Market Review & Outlook Report 2023’, analyses the agri sector performance over the past year and projects how it will perform over the next 12 months.

In all 134 agri professionals and valuers were surveyed, who expect the outlook for dairy farmers to ease and a challenging future for sheep and tillage farming.

Rental Land values in Munster increased by an average of 13% in the last year with a 9% increase experienced in Leinster.

The report indicates that the average non-residential farmland prices in 2022 ranged from €5,564 per acre for poor quality land – up five percent from €5,308 in 2021 – to €11,172 per acre for good quality land – up two percent from €10,962 the previous year. Strong demand from dairy farmers for good quality land is driving the market.

The majority of those surveyed believe there is likely to be an increase in demand from dairy farmers to purchase farmland in 2023.

One point to note however, is that changes to the European Nitrates Directive, particularly measures aimed at protecting water quality, may have an impact on land prices, especially rental prices.

In order to maintain current levels of milk production – and to comply with the directive – many dairy farms will need to either increase their land area or reduce milk production.

The Residential Zoned Land Tax (RZLT) is also coming down the line at an alarming rate, farmers have until May 1 to make a written appeal. Under the new legislation farmers owning currently zoned land face an annual tax bill of 3% of the market value of their zoned land.

This will result in countless numbers of landowners facing crippling tax bills from next year on. It is expected that this new tax may bring forward extra land sales later this year before the tax takes hold.

The IFA (Irish Farmers Association) have this week sought a senior counsel review of the legislation governing the Residential Zoned Land Tax.

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What is a Fire Safety Certificate?

By John Healy of Healy Insurances A Fire Safety Certificate is an official document that verifies if a building design submitted as part of an application will, if constructed in […]

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2 years ago

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1 May 2023

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By John Healy of Healy Insurances

A Fire Safety Certificate is an official document that verifies if a building design submitted as part of an application will, if constructed in accordance with the plans and specifications approved by the Building Control Authority, comply with the requirements of the Building Regulations.

Fire Safety Certificates are issued by a Building Control Authority. The certificate confirms that the building has adequate escape facilities and that the building is designed in a way that prevents and limits the spread of fire. While all buildings must comply with the fire regulations, not all buildings will need a Fire Safety Certificate.

Which developments require a Fire Safety Certificate?

The Building Control Act (1990 & 2007) specifies the development types that require Fire Safety Certificates:

· Works in connection with the design and construction of a new building
· Works in connection with the material alteration of a day centre, a building containing a flat, a hotel, hostel or guest building, an institutional building, a place of assembly, a shopping centre
· Works in connection with the material alteration of a shop, office or industrial building where additional floor area is being provided within the existing building or where the building is being sub-divided into a number of units for separate occupancy
· Works in connection with the extension of a building by more than 25 square metres
· A building as regards which a material change of use takes place.

Some developments are exempted from requiring a Fire Certificate and can include:

· Certain single storey agricultural buildings
· A building used as a dwelling (other than a flat)
· A single storey domestic garage
· A single storey building ancillary to a dwelling which is used exclusively for recreational or storage purposes or the keeping of plants, birds or animals for domestic purposes and is not used for any trade or business or for human habitation
· Works in connection with a Garda station, a courthouse, a barracks and certain government buildings.

If a building is inspected by a member of the building control authority and it transpired that no Fire Safety Certificate is in place, the building could be subject to closure. For more information see www.kerrycoco.ie/home3/building-control/firesafetycerts.

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