Consumers warned over rising insurance costs

People have been warned by the Consumers' Association of Ireland (CAI) to resist any "outrageous" and "unacceptable" price increases from home and motor insurance companies in the coming months.

The CAI said it had been prompted to issue yesterday's warning in response to comments from the chief executive of Hibernian Avivia Stuart Purdy who said in a recent newspaper interview that insurance had become too cheap and would have to rise by up to 20 per cent.

The CAI chief executive, Dermott Jewell dismissed Mr Purdy's comments as an "outrageous talking up of premiums" and said forecast price increases of between 10 per cent and 20 per cent were "entirely unacceptable at any time."

He said there could be no justification for increases as insurance premiums are driven by the cost of claims which have been forced down by the PIAB (Injuries Board).

"For too many years Irish consumers suffered and put up with exorbitant insurance premiums. Now, when living standards are set to drastically fall, the talking up of decidedly unjustified increases is unacceptable in the extreme - and there are others now within the industry gearing up to spin the same story,” Mr. Jewell said.

Responding to the CAI comments, Hibernian Aviva said insurance its premiums reflected the cost of claims and a decrease in the cost and frequency of claims between 2002 and the early part of last year saw insurance premiums fall by approximately 40 per cent.

"Starting in 2008 and continuing in 2009 claims costs and frequency have been steadily increasing with rises in cost of claims of approximately 15 per cent to 20 per cent," the statement said.