While prices in pretty much every household expense sector are currently static or dropping the car insurance market is bucking the trend with prices rises which are expected to average 20% by the end of the year. More traffic and more accidents, meaning more insurance claims, is part of the reason for this. However, unsustainable pricing strategies by the insurers themselves are thought to be largely to blame.

Recently released figures by the Central Statistics Office show that in April motor insurance premiums were up 16% on the previous year, while general prices were actually 0.7% down. Some of the latest renewal premiums, especially for young drivers are now being sent out 25% up on last year, meaning by December the overall figure could be averaging a 20% increase.

More accidents, caused by increased traffic volume is having some impact on this increase, however, it should be remembered that actual repair work accounts for a relatively small percentage of premium costs. Increased use of lawyers for claims, especially in the case of personal injury, is probably having far more impact.

However, the biggest driver of the increases is a price war which has left some insurers making losses. The insurance companies are now realising that the low premium prices which were on offer were unsustainable and are now having to quickly recover lost revenue.
Conor Faughnan of AA Ireland commented, "Part of the reason premiums will keep rising this year is because in the past they were too low and there is also concern about low levels of reserves."