Average motor insurance costs €909. Setanta bill and ECJ VAT ruling likely to accelerate price rises
Under-25s pay highest average price of €2,681 and Dublin pays an average €219 more than rest of the country
car insurance price rises are racing away with motorists facing increases in annual premiums of 32% taking average prices to €909, new analysis1 from Irish insurance market experts Consumer Intelligence shows.
Its Motor Insurance Index shows average prices rose by 32% in the year to April – and increases are likely to accelerate as insurers absorb the cost of the Setanta Insurance collapse and European Court of Justice VAT ruling.
Consumer Intelligence anticipates the Setanta ruling — which means the Motor Insurers Bureau of Ireland is likely to pick up the costs — will add around €50 to average premiums while insurers’ costs will rise by up to 23% as they recover VAT on outsourcing.
Average premiums do vary month by month — Consumer Intelligence’s data shows some insurers actually reduce premiums on a monthly basis highlighting the need to shop around.
However the index, based on quotes across all major insurers, shows prices are already racing away with under-25s and Dubliners paying the largest premiums.
Average premiums for under-25s are €2,681 and have risen 37% in the year to April while average premiums for all drivers in Dublin have increased by nearly 36% to €1,077 compared with 31% for the rest of the country to €858.
Older drivers have not suffered as much but have still seen rises of 31.6% for those aged 25- 49 and 32.7% for the over-50s who pay the lowest premiums on average at €695.
Ian Hughes, Chief Executive of Consumer Intelligence said:
“Average motor insurance premiums are racing away and all the indications are that they will continue to climb.
“The Setanta and VAT rulings are adding to the pricing pressure for insurers and additional costs they are facing could be passed on to drivers.
“It makes sense to shop around and check whether your insurance is competitive as market analysis shows prices do vary from month to month and between companies.”
Consumer Intelligence’s data shows the average increase in premiums from March to April was 2.1% but for one provider the average price rise was 6.9% and for others it fell by 0.8%.
The European Court of Justice ruled at the end of March this year that insurers have to pay VAT on the value of work that is outsourced such as claims handling which could increase costs for firm by up to 23%.
Setanta Insurance’s collapse in 2014 has left outstanding claims of €90 million from 1,750 with the costs likely to be picked up by the Motor Insurers Bureau of Ireland although it is appealing against the ruling.
To find out more about the motor insurance market. Download our Motor Insurance Index. The data is used by the Office for National Statistics, regulators and insurance providers as the definitive benchmark of how price is changing for consumers.
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