Insurance-Edge Editor Alastair Walker takes a look at the reaction to the Setanta collapse in Ireland, the proposed two percent levy to cover the bailout costs, and the reforms needed to modernise the motor insurance market in Ireland, leading to a better deal for car and van drivers, plus motorcycle and scooter riders.
The collapse of Malta based Setanta has prompted calls for a 2% levy across the board on motor policies, which would be used as an emergency compensation fund. Legislation is making its way through the Dail in Ireland, and there’s plenty of comment in the Irish press on the matter. Yesterday Conor Faughnan, Director of Consumer Affairs at the AA Ireland, writing in the Sunday Independent, described the insurance market in the Republic as being `broken’ and highlighted the incredible fact that drivers still use a paper disc, affixed to a car windscreen, to prove they have insurance – a system that leaves itself wide open for fraud.
In the same paper, the news section reported that the Irish government is considering capping insurance claim payouts, in an effort to bring down premiums overall. Research has highlighted that injury claims awards in Ireland can be substantially higher than in the UK. But the article also stated that a Referendum may be necessary to add some weight to the legislation, because it is of course glaringly obvious that law firms would fight any arbitrary cap as being inherently unfair.
Let’s be honest, it would be – how can anyone say the limit for life-changing injuries can be set at say 1 or 2 million euros for a 20 year old?
LIFE IS A ROLLERCOASTER
Not just a classic Ronan Keating track, but an accurate summary of the motor insurance market in Ireland, which has seen Quinn go bust, plus Zenith and MCE withdraw from the market – with MCE blaming Brexit. Really? If being headquarted in the EU, as Setanta was, is the key to making a profit in Ireland then surely all MCE had to do was incorporate a back office in Luxembourg, Malta or Cyprus and crack on?
No, you see insurance isn’t that simple in Ireland, where most of the main players in the car insurance market decline to quote on vehicles that are nine years old, or older. The official reason is that the `risk factors’ are greater when it comes to older vehicles. Translation; owners of older cars are more likely to be on a tight budget and therefore taking all sorts of risks.
OK, let me throw in another statistic; in February MIBI (Motor Insurers Bureau Ireland) reported that it estimated about 150,000 uninsured vehicles were being used across the country, up from 85,000 in 2011. There are some two million drivers in Ireland, so that is about 7% of all drivers.
Only now is Ireland getting a roll-out of ANPR number-plate cameras to detect uninsured vehicles being driven on the roads. The project is expected to cover most main roads and motorways by 2019, but the fly in the ointment is that currently there is NO COMMON DATABASE of insured vehicles. Insurers, MGAs and brokers will have until late 2019 to add their policyholder details to a database which the Garda can instantly access, and then cross-reference the data fed in from their ANPR cameras.
Only when the insurance industry database is complete will the ANPR system become functional on Garda vehicles. That could be many years ahead and this slow adoption of technology betrays a lack of focus on the part of the Irish government.
NEWSFLASH: LYING ABOUT YOUR JOB, OR YOUR MILEAGE, ISN’T FRAUD
Here’s another problem, which isn’t particular to Ireland by the way, but the survey data is directly from Ireland’s drivers. In 2017 Liberty polled 750 of its policyholders and found that 56% considered that being untruthful about their true occupation was `mild fraud, or not fraud at all.’ A hefty 58% of under 25 year olds thought it was fine to deceive insurers about the mileage they covered every year. Let that sink in for a minute. Over half of younger drivers think it’s perfectly OK to lie to get cheaper insurance.
Recently an Irish insurer used the non-disclosure defence to refuse a claim of some 4000 euros, on the grounds that the policyholder lied about being unemployed. After the claimant complained this was unfair, the 4000 euros were eventually paid out. Why? Well the mediator decided that because english was not the claimant’s first language they couldn’t be expected to understand all the questions.
If you have a system that is being gamed by many users, who then lambast insurers in Ireland as a `cartel of crooks, gougers’ and much worse, then you have a fundamental problem of entitlement, by any means. Insurance is a contract between two parties and in the end, if the state (in Ireland or the UK) wishes to take on the risk of insuring all drivers, then it is going about it the right way by inculcating a culture of people pursuing their self-diagnosed grievances, and banging on about their endless consumer, gender and human rights, without accepting any responsibilities whatsoever.
The insurance market in Ireland is broken because trust has evaporated on both sides. To fundamentally change things takes more than a 2 percent levy slapped on all policies. Instead there must be a sea change in attitudes, where crimes like driving without insurance – which puts peoples lives at risk – is seen as a more serious offence than saying bad words on social media.
It is ludicrous that people are walking away from court with a fine of a few hundred euros/pounds, (representing a fraction of the cost of annual cover) and others are being jailed for much more trivial matters like failing to buy a TV licence, or calling someone a nasty name on Twitter. Those who kill or seriously injure while driving or riding a scooter/motorcycle without insurance should face the same lengthy bans as drink drivers, with huge fines, property/asset seizures to pay those fines and a mandatory licence re-test. Only then will the crime of driving without valid insurance be taken seriously.
Right now, driving uninsured is regarded as a risk worth taking by an increasing minority on the roads, in Ireland and the UK, because the punishment is usually cheaper than paying the premiums – that has to change.
DATA TRANSFER CAN REBUILD TRUST
For the industry, their role should be to deploy modern technology as rapidly as possible in Ireland, so that people with telematics fitted, or those who want PAYG cover, can get what they need at a reasonable price. There must a discernible reward for sharing lifestyle data, for this is the key to assessing the true, holistic, policyholder risk – an older car or motorcycle is not inherently riskier than a modern car. So those owners who trade their journey data openly and honestly need to be rewarded. If they are, then they will become the social media ambassadors of a new system, one built on mutual trust. Others will see the benefits and realise that lying about your job, postcode, parking or commuting miles is pointless.
The AI-powered tech is here, right now, to make true personalisation of insurance a reality and make data trading the foundation stone of a lasting contract between insurers and policyholders. Rebuild trust through tracking apps, telematics scores, plus industry-wide agreed standards on driver behaviour, vehicle maintenance and claims history.