Is dual-pricing ripping you off? What can you do about it? My thoughts on the current state of the insurance market.

Sinn Fein TD, Pearse Doherty, this week raised the issue of dual-pricing by motor insurance providers. He gave the simple example of him applying his details when looking for a new quote and getting a much cheaper price than that offered on his renewal quote.

This is an exploitative practice which takes advantage of you and punishes your loyalty. Here's the kicker, they're all doing it. You can shop around and maybe get a better deal with someone else but you can be guaranteed in a year or two you'll be facing the same situation. The trouble is, there isn't enough competition in the Irish insurance market to really combat their ability to exploit you. Because it's law, you have to get your motor insurance from a very select group so the threat of you taking your business elsewhere doesn't exactly hold water because someone else will be stepping in to pay the premium you've just declined. It is, even without the intent, a cartel.

It's a never ending merry-go-round that few in government seem willing to put the brakes on. The way I see it, there are three options that those in power could go for.

1. Increase competition. This is the most obvious one but requires a major cutting of the judicial and out-of-court awards. Getting more companies into the market gives consumers more choice and will enforce a form of self-regulation. Foreign companies, however, are put off the the absolute chaos that is the Irish insurance system at the moment. Who in their right mind would want to set up a new insurance business here given the enormity of our court awards?

2. Open up the EU market. We can buy clothes, tech and food from across the EU, why not include insurance in that as well? Insurance costs, particularly motor insurance, are much cheaper on the continent. Simply allowing us to purchase from Spain, Germany etc could be a potential option. The trouble with it? Insurance is a financial product and would require synchronising our financial markets with our EU neighbours. Given the ongoing battle surrounding our corporate tax rate, I can't see our government TDs going anywhere near it.

3. Change the insurance system entirely. This would require a constitutional change and therefore a referendum, but it could be done. We could implement a system of insurance whereby the basic level of insurance (third party) is paid for out of general taxation or a levy on fuel. It would require a governmental insurance department to run it and resolve claim issues etc. In effect a public-owned insurance company. Private companies could offer supplementary products like fully-comp insurance which motorists would no longer be obliged to purchase.

The third option would be my preference. Given that motor insurance is required by law, I think it is only right that those who apply the law offer the coverage. Private companies are driven entirely by profit. Normally I have no issue with that, but when you force your populace to purchase their product, it lends itself to exploitation. The initial argument against this would be job losses. The insurance companies would threaten cuts etc. But if done right, those jobs would simply be moved to the public sector rather than the private sector. Also, given how many companies are closing these days due to the ridiculous public liability insurance prices, if we expand this system of insurance to incorporate this, it would lead to an increase in jobs instead.

This system would require constitutional change to enact, but it can work if the political will is there.

If you're reading this, I ask a simple favour of you. Please email your local TD, their email address can be found at https://www.whoismytd.com. If you wish, simply forward this article to them and ask that they look it over.


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