FTA Ireland Motor Insurance Survey – more regulation needed

Aidan Flynn, General Manager – Freight Transport Association Ireland (FTAI)
Increased motor insurance costs for commercial vehicle operators could curb efforts to remain competitive, according to FTA Ireland. A survey of motor insurance prices by the association found that 87 per cent of its members experienced rises in 2016, with half saying their premiums had gone up by more than 40 per cent.

To compound the problem, the lack of regulation and transparency within the insurance sector in Ireland is causing confusion on pricing and not enabling fleet operators to compare prices effectively and efficiently, according to FTA Ireland.

“FTA Ireland welcomes the recently-published finance sub-committee’s report on insurance,” said Aidan Flynn of FTA Ireland. “However, it is disappointing that the report made no specific recommendations relevant to the commercial fleet sector. This would have given peace of mind to fleet operators who are being burdened with huge hikes in their insurance premiums.

“It is vital now that insurance is on the agenda for government so that commercial fleet insurance is dealt with as a stand-alone item for investigation and discussion. There is no point inviting stakeholders like FTA Ireland into discussions on insurance and then ignoring the issues for the fleet sector and focusing completely on the more populist issues such as private more insurance.”

FTA’s survey, gathered evidence from commercial truck fleet members about their experiences over the past 12 months. Tocompound the challenge of achieving a competitive rate for such vital insurance, around athird of those questioned admitted they were uncertain what commission or fees their insurance brokers were charging.

“This demonstrates a real and very worrying lack ofregulation,” continues Flynn, “since one of the basic obligations of an insurance broker is to make it clear to the client the fees charged and commission due from the insurance company. Brokers are making significant fees and commission increases off the back of the significant insurance premium hikes and taking advantage of freight operators.

“Commercial fleet insurance is a complicated process with a lot at stake. It is therefore imperative that insurance brokers have competencies and an acute understanding of this specific area rather than viewing the relationship with a fleet operator as just another transaction.”

Mr Flynn said there were few specialised commercialfleet insurance brokers so operators struggled to get the best deal for their businesses. He said government committees needed to engage in the process by improving rules of engagement for brokers, auditing these rules by the central bank and encouraging insurance companies to mandatorily push for risk management practices to be audited.

FTA Ireland is calling on the insurance sector, as well as the government’s Cost of Insurance Working Group, to implement the following recommendations:

• Separate out private and commercial motor insurance issues to enable a more
structured debate on how to better support insurance outcomes for the commercial
fleet sector
• Audit proposals submitted by brokers to ensure the detail matches reality
• Insist that insurers must audit risk management of the client and develop and enhance
a culture of risk management
• Demand more transparency in claims handling
• Make it imperative that insurers consider the Road Safety Authority’s commercial
vehicle operator risk index (CVORI)
• Ensure that companies that engage in risk management practices and accreditation
schemes such as FTA Ireland’s accreditation programme must benefit from
recognition from insurance companies
• Require that insurance companies must base price onthe actual level of assessed risk
in the operation not on the market norm

“Risk management is a discipline that offers many rewards – notably improved safety and reduced accidents and incidents. The insurance sector must be encouraged by the likes of the insurance sub-committee to recognise and amend premiums accordingly for operators that pass audits such as the FTA Ireland accreditation and demonstrate good risk management and safety practices. FTA Ireland is leading the way in changing the culture of compliance in Ireland with Brakes Ireland, Mcardle Skeath, NVD and BOC Gases recently achieving our Gold Accreditation Standard.”