Motorists in Northern Ireland are facing significantly higher insurance premiums compared to their counterparts in the South, with costs driven by an array of alarming factors.
Gary McClarty, Director of MCL InsureTech Limited, which operates the GetSetGo and its4women brands on both sides of the Irish border, sheds light on the stark disparity in car insurance costs which can inflate premiums by up to £823 for younger drivers.
The escalating cost of motor insurance in Northern Ireland has been widely discussed, with reasons ranging from inflationary pressures to a lack of competition in the market and higher personal injury awards. However, Gary identifies a major, yet often overlooked, contributory factor: the exorbitant cost of settling non-fault claims here.
“As we operate on both sides of the border, we have access to data on accident frequency, claim settlement costs, and the stark differences between Northern Ireland and the Republic are eye-watering,” he says. “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.
The impact is even more pronounced for younger drivers, who face a claim frequency over 300% higher, adding an astonishing £823 to their average premium. Gary explains that one significant factor contributing to these costs is the presence of accident management companies in Northern Ireland. These companies often encourage customers to make claims through them rather than directly contacting their insurers.
“While non-fault claimants benefit from preserving their no-claims bonus and avoiding excess recovery, these companies often inflate the overall claim settlement costs. A significant contributor to these increased costs is the expense of hiring cars for non-fault drivers, which can be as high as several hundred pounds per day. In many instances, the cost of car hire exceeds the cost of repairing the vehicle.”
For the first time in his career, he has observed that the average cost of car insurance is now cheaper in the South than in Northern Ireland, and even, in many cases, than in Great Britain. “Yes, personal injury costs are higher in Northern Ireland compared to Great Britain, but the way claims are handled across the UK is dysfunctional and is another factor driving up costs.”
The alarming disparity in insurance premiums highlights the urgent need for a comprehensive review of the factors influencing these costs and the introduction of measures to address the inefficiencies and imbalances in the system, he says.
