How to combat rising premiums
We are all fed up hearing about rising premiums. We worry about what sort of increase we will be facing at next renewal. The media are reporting increases of up to 200% in some cases. Those sort of increases are rare and in the extreme, or for particular reasons e.g. young drivers, excessive penalty points or poor claims experience etc.
Due to the under-pricing of premiums over the past 10 years, some insurers are now trying to play catch-up in one go.
In many ways the insurance industry are to blame for the boom/bust cycle that has led to the current situation. Insurers fought a price war for market share after the crash which saw people cancelling policies they could no longer afford, or reducing sums insured to save on premiums. Some Insurers under-reserved on claims estimates, which effectively under-stated their liabilities and masked the true status of their solvency. The scandal of RSA in November 2013 exposed the problem and the decline of Setanta Insurance in April 2014 and more recently Enterprise Insurance (both based/regulated off shore) were further proof of the malaise.
Despite the difficulties, there are ways to save on premiums. Here are our top 5:
1. Shop around
2. Use an insurance broker
3. Review your cover
4. Review your sums insured
5. Pay in full up-front
Having said all that, many of the unreasonable increases are in relation to motor and liability insuranc. We continue to see astonishing awards being handed down by the courts. There was a two year old who fell in a crèche that resulted in a 1cm scar that was awarded €40,000. How can such sums ever be justified?
We would always urge people to use an insurance broker. They have access to a huge range of insurers and will seek out the best value and cover for each individual risk. They will be able to offer the best advice for each circumstance. If you go to a direct insurer you are not necessarily getting the best advice, the best cover or the lowest price. In the event of a claim you will be on your own.
Whatever you do, do not under insure. It may save you a few Euros on the premium but in the event of a claim you could lose out on thousands.
At the end of the day, insurance is a “grudge” purchase. Nobody like to pay the premium, but in the event of a claim there is no greater peace of mind. That is the moment of truth, when you find out the true value of your insurance cover.