Northern Ireland car insurance rip-off: Fightback begins
Published 01/09/2011 | 02:35
Car insurance quotes for drivers in Northern Ireland are on average double that quoted for the same profile living in the south of England, the Belfast Telegraph has found.
A straw poll by this newspaper has supported a report by the Consumer Council that drivers in Northern Ireland are paying much higher premiums than their counterparts elsewhere in the UK.
The cheapest quote for a 40-year-old woman in Belfast was £1,400, but the insurance premium was on average half that amount when the exact same profile was given a postcode in Buckinghamshire.
Similarly, a 60-year-old man, from Belfast, was quoted on average £800, but his car insurance quote was nearly halved when given a Buckinghamshire postcode. But the survey found that all young male drivers are quoted exceptionally high insurance premiums across the UK.
The Consumer Council has launched a campaign to reduce car insurance in Northern Ireland after it revealed that drivers in the province were on average quoted £282 more, some 84% higher than those in other parts of the UK.
The campaign got off to a flying start with more than 200 signatures gathered within hours of an online petition going live yesterday.
One of the main reasons for high premiums cited by the Consumer Council is the size of the insurance market in Northern Ireland - the smaller the market, the less competitive the rates.
However, insurance broker Sam Geddis from Adelaide Insurance in Belfast argued that premiums have fallen dramatically since 2002 when more insurance companies began to trade in Northern Ireland.
"Competition drives prices down," he said.
"When I look at our consumer base there are areas in the UK where insurance is more expensive than Northern Ireland, predominantly in major cities such as London, Manchester and Glasgow, but yes, as a geographical area Northern Ireland has higher premiums."
Despite more insurance companies trading in Northern Ireland in recent years, consumers also still have less choice, with three times fewer companies offering car insurance here.
Segmentation of the market is also a factor for Northern Ireland with many firms not operating directly but only through a broker.
"In addition, not all companies trading here will provide consumers with a quote," said Joleen Cunningham, senior consumer affairs officer at the Consumer Council.
"We have been told that only two or three local insurance companies will provide car insurance to 17 to 22-year-olds."
The insurance industry argues that the main reason for higher premiums here is the higher cost of personal injury claims.
Just last month, Paul Hatty, Northern Ireland chairman of the British Insurance Brokers' Association (BIBA), said there had been a "massive increase" in the number of personal injury claims made on the insurance industry.
He said: "What we're getting now is some claims management companies using aggressive marketing techniques to try and encourage people to make a claim.
"The financial benefits to companies from assisting in a personal injury case have tempted some companies into encouraging insurance fraud."
The cost of these fraudulent claims is more than £900m a year - which adds, on average, £40 to every UK motorist's premium.
The Consumer Council has questioned the fraud figures.
"We have asked the insurance industry to provide us with figures to show the level of fraud but they can't and nor can the Justice Department," said Joleen.
The Consumer Council campaign involves:
* 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.