Should we introduce "pay at the pump" insurance?

Figures released last week show a 17% increase in claims against uninsured drivers

Figures released last week by the Motor Insurers' Bureau of Ireland (MIBI) show a 17% increase in motor claims relating to uninsured or untraced drivers.

There were 1,644 claims of this type between January 1st to end of July 2016 - which represents an increase of 235 claims compared to the same period in 2015.

Some 42% of these claims were in Dublin while the capital also saw the largest increase in the number of claims, with 78 more made this year compared to the same period in 2015. 

Speaking about these statistics, David Fitzgerald of the MIBI said: “Every year the MIBI manages thousands of claims against uninsured or untraced drivers. That is role this organisation was set up to fulfil since we were established by the Government and the insurance industry in the 1950s.

“As a not for profit organisation all our claims are funded by the motor insurance providers operating in this country, with the costs ultimately covered by Irish motor insurance customers.

"On average the MIBI pays out approximately €60m a year for claims of this nature.  We estimate that accounts for €35 within the cost of the average annual motor insurance premium," he added. 

In New Zealand, however, a motorist's share of tax and levies are included in the price of fuel at the pump. Insurance is not compulsory in the country - but a driver will be in serious financial difficulty if they are at fault for an accident and are not covered. 

One option to tackle this issue in Ireland could be to have a blanket minimum charge on each driver's fuel which would fund a basic third-party insurance policy for all motorists, with the understanding that premiums would in-turn decrease. 

As long as an increase at the pump is proportional to a decrease in premiums, a "pay at the pump" system could be a feasible option going forward. 

This would also offer foreign drivers some degree of protection, knowing there is a mechanism in place locally and would allow them to contribute while they are here simultaneously.   

Staying with New Zealand, the country's vehicle registration tax also funds their Accident Compensation Corporation - which provides no-fault personal injury cover for all residents and visitors.

A similar system could be introduced here but would require an extensive overhaul of how we pay insurance and how much governmental involvement there is.