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MLAs launch probe into cost of insurance

0 Comments | News Letter (Belfast, Northern Ireland), The, April 22, 2010

With premiums higher than any other region in the UK, a Stormont committee has decided to probe why quotes like car cover are almost double those in Great Britain.

The high cost of claims for injuries like neck injuries in Northern Ireland are among reasons given by insurers for the price of policies.

Stormont Finance Committee member Mitchel McLaughlin said: “The industry seems to be playing fast and loose.”

The Consumer Council says people pay 84 per cent more on average (A[pounds sterling]282) for car insurance in Northern Ireland than in the rest of the UK.

Its report last year also found local households pay nearly 40 per cent more in total on car, contents and building insurance.

Sinn Fein MLA Mr McLaughlin proposed the fresh investigation, which was accepted by the rest of the committee members.

Because of the cost of establishing a network of valuers and offices in Northern Ireland some Great Britain insurers are reluctant to quote for Northern Ireland.

The prohibitive cost of payouts for relatively minor claims – the cost of neck injury is twice that of the UK average – means the risk attached for insurers in Northern Ireland may be greater.

The General Consumer Council gave evidence to the committee at Stormont yesterday.

Alison Donnelly, senior consumer affairs officer at the Consumer Council, welcomed the committee’s investigation.

“We believe that an investigation could go a long way towards identifying what the issues are and could shine a light,” she said.

“We believe there are many facets the Assembly could look into.”

Jonathan Craig, DUP MLA, said it was not acceptable people suffering an injured toe of broken nose were paid so much more in compensation.

“Clearly there is a massive issue there with regard to minor injuries which probably account for a huge percentage of the overall claim,” he said.

“Until that is tackled we are leaving the insurance companies with a get-out-of-jail-free card.”

According to the Audit Office, the reason for the higher payouts in Northern Ireland was because assessment was carried out by juries.

When the practice was discontinued the differential was maintained under judicial guidelines.

An Association of British Insurers spokesman said: “There is no fundamental bias against insurance customers in Northern Ireland. Some customer groups in Northern Ireland pay more for insurance cover than their British counterparts, while others pay less.

“However, the legal system is a primary driver of costs in Northern Ireland and we would like to see it reformed.”