Insurance companies will have to be more transparent when it comes to justifying rising premiums thanks to the formal publication of a report by "The Cost of Insurance Working Group”.

The report published in January, includes over thirty key recommendations on reducing the cost of vehicle insurance, with one being that insurers will have to provide an explanation to a driver of why their premium is rising. From a bodyshop perspective such information would be welcome to highlight that repair costs cannot be blamed for current spiralling insurance premiums.

The Department of Finance will now engage with the insurance industry to establish a common protocol to communicate to customers the reasons for the large increases and legislation will be brought in this year to ensure industry compliance. In 2016 many divers reported unexplained increases in insurance quotes from anything from 50% – to 300%. It is hoped this new transparency will help to bring down costs and increase consumer choice. 

Elements of the report itself will make uncomfortable reading for the insurance companies. In his foreword the Minister of State for the Department of Finance Eoghan Murphy, says, "The  operation  of any insurance market is complex, however the  market in Ireland is further impacted by practices that are outdated and which also appear to be unique to the market here.” The executive summary of the report goes on to state. "Aspects of the operation of the market in Ireland are in need of modernisation, for instance there is a need for a greater level of transparency in relation to claims data, as well as a fully functioning database to identify uninsured drivers.”

One of the key recommendations of the report is for the creation of a national claims information database by the middle of 2018 and ahead of that the insurance industry to provide key metrics in relation to the market for publication by the Department of Finance. What the report says this entails is transparency in seeing "how claims are being made against property or for personal injuries, the legal and other costs that are being incurred, and the channel of resolution and what impact that has on the final settlement. It is expected that greater transparency in the claims environment will allow for the identification of trends and appropriate policy responses.”

If and when this is implemented this should be good news for the repair sector. In recent years while premiums have risen dramatically, the actual labour cost paid for repair has at best been stagnant and in many cases has seen a significant decrease in real terms. However, the implication from insurers in relation to rising premiums has often been that repairers are either profiteering or perhaps engaged in fraudulent activity, both of which are far from the truth.  

If insurers are compelled to give genuine accurate data on claim cost this will show what a small percentage the cost of repairs actually accounts for and allow the industry to target the real causes of rising premiums such as spiralling personal injury claims.  

The report itself runs to 178 pages and disappointingly makes little reference to the vehicle repair sector or the plight of accident repairers. This perhaps reflects the need for more coherent representation for the bodyshop sector in such instances. For example the report considers the impact of the rising cost of insurance on the Taxi sector but at no point makes reference to bodyshop needs in relation to issues such as rapidly developing vehicle technology,repair practices, training and equipment investment.

As well as greater insurance company transparency the report also makes some other key recommendations on reducing insurance cost. These include a review of the personal injury claim environment with a view to greater consistency and cost reduction and greater data sharing to reduce the risk of insurance fraud. This would in particular involve greater cooperation between the insurance industry and An Garda Síochána in relation to uninsured driving. 

Other measures recommended by the report included a fairer deal, in relation to no claims recognition for  people returning to Ireland after living abroad and a renewed emphasis on greater road safety and reducing collisions, especially through the use of technology.

An action plan for implementation of the recommendations of the report is included in the publication with clear date milestones set out.

As the Minister himself says in his foreword It is clear from this report, and also the work of the Joint Oireachtas Committee, that there is no single policy or legislative "silver bullet” to immediately stem or reverse premium price rises. However, from a repair industry perspective while the level of recognition for the industry in the report is disappointing, overall the findings do represent a step in the right direction.