Editor's Viewpoint: Time to unravel premiums puzzle
Published 23/04/2010 | 08:00
It has long been accepted that we in Northern Ireland pay more for our household, vehicle and other premiums than residents of other parts of the UK.
A Consumer Council report last year suggests that the practice of charging higher premiums continues, with car insurance costing up to 80 percent more than the UK average. When household and contents insurance is added to the equation, the annual bill comes in at 40 percent higher than in other regions.
Now the Finance Committee at Stormont is to conduct an inquiry into the insurance industry. It is a complex issue which will take some time to unravel. On the one hand, the insurance companies say that compensation payments and legal costs in the province are higher than in other regions. It is an argument that has some validity, but whether it justifies the scale of the differential on premiums is one of the issues to be scrutinised.
Customers, meanwhile, say that the lack of competition in the insurance market here - many firms which advertise competitive rates in the media specifically exclude Northern Ireland - means there is less compulsion on insurers to lower prices. The exclusion of Quinn Insurance from selling new premiums in Northern Ireland while its finances are under investigation has taken out another piece of the equation from the local marketplace.
Another complaint is that when claims are made, some insurers immediately raise new premiums significantly and/or increase the excesses which have to be met on any future claims by the customers themselves.
The Finance Committee's investigation is welcome and is the type of activity that the electorate wants to see from the power-sharing administration at Stormont. Insurance costs hit every household in Northern Ireland and it is imperative that the market here is as efficient as possible. This investigation should go a long way towards discovering why premiums are higher and how equality can be established. Shopping around is the best advice.