Some people here are paying up to £823 more for car insurance compared to drivers in the Republic, according to an industry expert.
Gary McClarty said many factors contributed to the higher prices, but one of the most overlooked is the “exorbitant” cost of settling non-fault claims.
He believes accident management companies, who handle these claims directly with insurers on behalf of claimants, are a real factor in this.
Mr McClarty is director of MCL InsureTech, which provides technology and software to insurance companies on the island.
He said its work on both sides of the border provided a lot of information about how the industry operates across the jurisdictions. His figures are based on analysis of this data.
He said: “The frequency of third party damage claims in Northern Ireland is 162% higher, and the average cost of settling these claims is 60% higher, than in the Republic of Ireland.
“This combination, even after accounting for exchange rates, adds £248 to the cost of the average motor insurance premium.”
Gary McClarty
As younger drivers face a 300% higher claim frequency, their average premium here is £823 higher than across the border.
He said rising insurance costs were down to a number of reasons — including the amount of accident management companies here compared to the south.
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He added: “We’re seeing two things. I think that the prevalence of the third party claims is considerably higher in Northern Ireland compared to the Republic… because these claims companies do exist in Northern Ireland, which don’t exist in the Republic.
“And then, secondly, because of the fact that there is other costs associated to it, like car hire, that’s further driving the cost up of settling claims, which is obviously passed on to the consumer.”
He explained: “Say you crash into somebody and you’re not at fault in that claim, these accident management companies would contact you.
“They’ll take that claim directly against the insurer rather than putting it through the insurance team system. The car will go to a body repair shop, you’ll get car hire.
“That car hire… in some cases we’re seeing £200 per day. “So, you do that over five days — there’s a thousand pounds.
“Because parts are slower to get as well, cars are taking longer to repair. The car hire bill is running into weeks.
“In many cases, the cost of the car hire is considerably more than the cost of repairing the vehicle.”
He said the figures associated with accident management were eating into the “already slim profit margins of insurers”.
He added: “It’s inflating the costs of claims. We can see the insurance industry and their returns over the period — the margins are wafer thin.
“Whenever the insurers control the claim themselves they can control the costs.
“Whenever it goes to somebody else, and they have no control over it, it’s harder to control those costs.
“Hence, your profit margins can sometimes be empty because of that, because you’ve underestimated the costs of settling the claims.”
Mr McClarty accepted accident management companies “definitely have their place” in terms of helping motorists deal with claims.
But he insisted more could be done to bring the price of claims down at a governmental and legal level.
He said: “Some medium-sized cars are costing £200 a day to hire.
“But you can go out and hire one of those cars for a week for £400 pounds.
“I think it’s just looking at controlling those costs a little bit better than they are at the minute.”