Car insurance costs have gone up by almost 40% in the last year

Rising premiums have been linked to an overall increase in inflation

Car insurance costs have gone up by almost 40% in the last year

File photo: RollingNews.ie

Car insurance premiums have shot up by nearly 40% in the last year, according to new figures.

The Central Statistics Office said rising motor, health and home insurance costs have all contributed to a half-percent increase in inflation since July 2015.

Over the last 12 months, car premiums have gone up by 38.6%, while home and health insurance have increased by 11.2% and 7.6% respectively.

The insurance industry has apportioned blame for the surge on the number of customer claims.

Insurance Ireland pointed to increases in the level of awards and frequency of compensation secured through the courts last year.

"Concrete action needs to be taken, including internationally benchmarking our high personal injury awards and increasing the powers of the Injuries Board to reduce costly legal fees in the claims process," it said in a statement. 

"The government must also revisit the proposed policy to deal with the claims of motor insurers in liquidation, such as Setanta Insurance, which puts unlimited liabilities on rival companies.

"Insurers price for risk and liability and if motor insurers are forced to bail out their rivals, this can only impact on claims costs and premiums."

Concern

However, Sinn Féin TD Donnchadh Ó Laoghaire said the latest figures failed to add up.

"I am deeply concerned at the move by some insurers to simply no longer quote drivers at first and then after an appeal to quote outrageous figures for simple renewals,” he said.

"This 38% hike is not down to insurance fraud, higher claims or any other excuse.

"Some categories of motorists have been particularly badly affected, including young people, people over 65, and people who are returning from emigration, who are all being quoted prohibitive premiums, effectively telling them that they do not want their business.

"In many cases this means the young and returning emigrants are being hamstrung in trying to find work.

The root cause of the increase is that the industry has until now survived on an "unsustainable model" of using investments to cover other losses, he added.

"In an age of zero rate returns, this model is failing.

"With interest rates so low across Europe, insurance companies are instead penalising drivers, whose record has not changed, with massive unjustifiable increases."