Hayes calls on CCPC to investigate ‘dysfunctional’ motor insurance market
European Commission says CCPC well-placed to investigate
Brian Hayes MEP today said that Ireland’s market for motor insurance has become dysfunctional and has called on the Competition and Consumer Protection Commission (CCPC) to investigate why consumers are suffering from inflated premiums.
“The cost of car insurance premiums has gone up dramatically in recent years. Over the last 12 months to July, premiums have risen by more than 38% and over the last three years they have increased by 70%. Frankly, it is difficult to understand the reason why premiums have increased. But what is clear is that the motor insurance market in Ireland has become dysfunctional.
“Recently, I questioned the European Commission about how we can find a solution to this issue. The new Commissioner for Financial Services, Valdis Dombrovskis, has told me that the Competition and Consumer Protection Commission (CCPC) is well-placed to investigate why premiums have risen so much and whether anticompetitive behaviour is at play here.
“This is a valid suggestion. I believe that given the escalation of the problems in the motor insurance sector, the CCPC should carry out an immediate investigation of the root causes of the problems.
“Consumers are angry at this growing problem and rightly so. The relationship between insurers and consumers has been broken in recent years. There needs to be more transparency as to why premiums are being increased. And I think we need to aim for a system which allows for fairer pricing. A rise of 38% in premiums in one year does not represent fairness.
“Blaming insurers is not the way to solve this problem. We have seen with the departure of Zenith Insurance last week from Ireland that the car insurance market is a tough place to operate. Zenith Insurance has left the market due to varying reasons such as rising regulatory costs, a lack of engagement from regulatory bodies and an uncertain legislative environment.
“There are a variety of reasons outside the control of insurers which are contributing to the rising cost of premiums. Insurance fraud remains a big concern. The legal dispute in the case of Setanta insurance remains a major problem for the industry, particularly given that policyholders still await their claims to be paid. The legal environment and regulation also need to improve to protect consumers and to ensure that the industry can operate effectively. Cross-border regulatory cooperation needs to be stronger in order to prevent a repeat of the Setanta Insurance failure.
“I believe that a thorough examination of these issues by the CCPC would lead to the necessary policy recommendations needed to repair this dysfunctional market.”