NI Consumer Council ask OFT to look at price of car insurance

Both the BBC and the Belfast Telegraph this week ran the story that the Consumer Council have asked the Office for Fair Trading to look at the car insurance market here in Northern Ireland.

It appears that the average price for insurance in Northern Ireland is £924 which is apparently a 74% increase in the last two years. For younger drivers the rise has been 112%. Prices are on average 84% higher than those in mainland GB.

The Consumer Council campaign has four parts (from the Belfast Telegraph):

A formal submission to the Office of Fair Trading (OFT) to enable it to examine the car insurance market.
An online ‘Lower Car Insurance’ petition launched for drivers to pledge their support.
Calls for the Department for Justice and the Assembly’s Justice Committee to examine the impact of the costs associated with claims.
Plans to meet the Environment Minister Alex Attwood to ask for practical initiatives to support younger drivers.

The usual explanations for the higher costs of insurance here are the higher number of uninsured drivers: which the higher cost of insurance can only increase and as such can become something of a vicious circle. In addition the higher cost of insurance claims here with much more paid to claimants: a minor whiplash claim in NI gets up to £8000 whereas in GB it gets £500 to £2000. Again there might be a bit of a vicious circle issue here. If people pay so much for insurance they are possibly more likely to make claims on other people’s insurance in the event of an accident. There is also the issue of fraudulent claims: things such as minor whiplash are hard to prove but equally hard (and expensive) for the insurance companies to disprove: often cheaper to pay out the money but then of course that needs to be recouped from the motorist.

Whilst there is probably some merit in the claims by the insurance industry that insuring people in Northern Ireland is more expensive, the cost differential seems unreasonable. The solution, however, requires action from many quarters. Action should be taken against uninsured drivers but probably more importantly compensation settlements should be reduced to the same level as GB and claims for those who were not actually injured should be thrown out whilst those made dishonestly should result in prosecution.

It is completely unreasonable to expect young people who often need the car in order to go to work or university to pay several times the value of the vehicle to insure it. As so often it is the poorer and younger in society who suffer disproportionately from the price of insurance.

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  • wild turkey

    ” a minor whiplash claim in NI gets up to £8000 whereas in GB it gets £500 to £2000″

    um, would that because brass necks are more expensive to treat and repair?

    i defer to the considered opinion of any medical experts on the issue.

  • wild turkey

    …excusee follow up to brass necks

    “things such as minor whiplash are hard to prove but equally hard (and expensive) for the insurance companies to disprove: often cheaper to pay out the money but then of course that needs to be recouped from the motorist.”

    Turgon, which motorists exactly? i think this is where postcodes might usefully come into play ( i believe postcodes are one of the primary variables in determining the cost of car insurance)

    i have vague memories that back in the 1980s and early 90s there was a serious cottage industry in some locales regarding claims for injuries arising from broken sidewalks, sorry, pavements. indeed, there were apparently a few cases where multiple members of the same family were tragically injured by defective pavements and streets. of course, the victims, were compensated, I believe, by the then DoE and/or relevant council

    i wonder is there is any correlation between earlier pavement payouts and car insurance payouts for “minor” whiplash?

    just a question….

    thank you for your time

  • Turgon

    wild turkey,
    I have no idea on that one. All I can say is that when I changed the car eight months ago, I was actually surprised how little mine cost to insure (all things being relative). Then again I am 40 and by the Grace of God have a clean licence and a full protected no claims bonus, as does the wife (though obviously on other occassions she is still 21).

  • oracle

    Perhaps the Consumer Council chief should just send the insurance companies an email just to ensure they are both singing off the same hymn sheet for the media coverage!

  • aquifer

    ‘a minor whiplash claim in NI gets up to £8000 whereas in GB it gets £500 to £2000’

    The insurance industry do not care if these claims are high, it makes it easier to hide their profits within the increased premium. Insurance companies are also selling leads to legal vulture firms, a disgrace which encourages fraud and inflates the costs of dealing with incidents.

    This nonsense needs to stop, people need their cars to get to work and to transport toddlers. This is killing labour mobility and employability. This happy hunting ground of greedy fraudsters and their lawyerly scribes needs to be closed.

    We need to go to the New Zealand system where there are fixed payments for particular injuries.

  • aquifer

    I think that part of the problem here is that juries rather than judges decide the compensation amounts. It is great fun giving away other peoples money, except that the money is paid by every adult who drives, with a hefty percentage added on for the performing lawyers and for the insurance companies exposed to doing business in a queer legal backwater.

    We cannot afford this any more.

  • a minor whiplash claim in NI gets up to £8000 whereas in GB it gets £500 to £2000″

    Does this figure take into account Legal Costs?

  • Rory Carr

    I doubt, Aquifer that many of these claims ever progress to trial so I rather think that it is unfair to blame juries which in any case, if they did have to deliberate, would be subject to strict direction by the judge and any award thereafter subject to appeal.

    An interesting point, Seymour but as such would also apply in Britain would not make a difference. However “up to £8,000 ” may mean only that a single award of £8,000 was once made in a case of aggravated injury.

    My interest in all this stems from my late father-in-law, a staunch West Country member of the Brethren who, besides being himself in the coach and haulage businesses, drove at great speed (he fancied himself as a bit of a Stirling Moss) all over the country preaching to the saved. On one occasion he became annoyed at a tailgating driver and slammed on his brakes a bit sharpish so that the driver ran into him then went to his solicitor who advised him to see his doctor and make a claim for personal injury. He then wore a surgical collar for six months and after collected a hefty sum in settlement.

    So delighted was he with the generosity of the award that he did it twice more over a number of years before either his conscience or prudence got the better of him..

  • Statistically there is a large enough pool of drivers here to spread the risk . In our dreams, collectively we could even self insure, sidestep the private sector marketplace, and form a go co. Efficiency of service might deteriorate in the hands of civil servants but car insurance premiums would fall significantly.

    Back in the real world, in the event of self insurance, we would continue to allow abuse the system and allow a significant minority to spoil it for the majority. Talk about self inflicted damage.

  • aquifer

    “I rather think that it is unfair to blame juries which in any case, if they did have to deliberate, would be subject to strict direction by the judge and any award thereafter subject to appeal.”

    I am not blaming jurors, it is the system that is at fault, if it still allows jurors to set the awards. A jury makes up its own mind, that is what it is for.

    You are right that most claims do not get to court, but the amounts being awarded in the courts set the level of payments agreed outside of them.