Office of Fair Trading investigates NI's high insurance premiums
Legal fees, bad driving, claims culture blamed for insurance costs
By Bob Hume, 30th January 2012
High legal fees, bad driving, a lack of competition in the insurance market and Northern Ireland's claim culture are all to blame for the high cost of vehicle premiums.
According to the Office of Fair Trading, the average Northern Ireland driver pays just over 10% more than their GB counterparts. Some insurance companies say the region's court system is more expensive - and that why claims are higher.
Compensation for a severe whiplash injury can be between £17,000 and £35,000 in Northern Ireland - but in England and Wales, it is much lower varying between £7,000 and £13,000.
James Dalton, Association of British Insurers, said: "The scale costs of the compensation system in Northern Ireland are substantially higher than they are in England and Wales. For example, those costs need to be borne by insurance companies and those costs need to be passed onto the consumers and that is why premiums in Northern Ireland can be higher."
Lawyers, however, want to focus on another cost which is driving up premiums - so called referral fees which are paid to win a slice of the business created by car accidents.Solicitors in Northern Ireland, who are forbidden from paying them, want them banned across the board.
The Law Society of Northern Ireland says referral fees have contributed around £2 billion towards the increase cost of motor insurance in England and Wales. This was revealed in evidence the Society presented to the Committee for the Environment at the Northern Ireland Assembly on Thursday.
They want proposals on 'referral fees' already passed at Westminster to be considered by the Northern Ireland Assembly as a matter of priority.
Rory McShane, former President of the Law Society, said: "Car hire companies, repairers, claims management companies, insurance brokers - all of those people who are involved at the moment in the referral fee business that should come to an end ...that will have the effect of reducing or should have the effect of reducing premiums in Northern Ireland."
The Law Society is currently working to bring forward proposals to significantly reduce the cost of car insurance in Northern Ireland.
The Environment Minister, Alex Attwood, has plans in mind which he believes will not just reduce insurance premiums - placing GPS linked black boxes in cars to monitor the driving of young motorists is just one example.
Mr Attwood believes such measures will make the driving on our roads safer.
"If we introduce a whole range of road safety initiatives and at the same time we bare down on the reasons why insurance premiums are 11% higher here and much higher in the rural area then I would expect the British Insurers Association and those who offer insurance in the north to reduce their premiums."
