Car insurance premiums now rising at three times rate of inflation

New figures show the cost of cover for a car rose by 7.4pc in May when compared with last year.

It was the ninth consecutive month that the cost of motor insurance has risen.

The rate of increase in the cost of motor insurance compares with the general rate of inflation of 2.6pc in May.

Figures from the Central Statistics Office (CSO) show that inflation in May was unchanged from the rate of increase in April.

Motor premiums started rising in September last year and continue to do so despite a raft of reforms being brought in to benefit insurance companies.

Insurers say motorists are making more claims and that it costs more to repair cars damaged in accidents.

Home insurance costs were up 5.8pc in the past year, while health insurance prices were up 11.9pc, the CSO said.

Last month, it emerged insurance industry bosses had been given a deadline to cut premiums after being summoned to a government minister’s office and told to pass on savings to consumers and businesses.

Consumer groups and business organisations have accused the industry of “a gross injustice” for what they say is a failure to cut premiums despite reforms being delivered for the sector that have reduced the cost of claims.

Insurers had repeatedly told the Oireachtas Finance Committee they would reduce premiums if they got key reforms, such as judicial guidelines, which have substantially reduced award levels.

But motor premiums have risen for eight months in a row, with home insurance also increasing.

Businesses say they are being hit by higher premiums – with strict restrictions imposed on what they are covered for if they have to claim – and are being forced to accept high excesses.

Neale Richmond, the junior minister with responsibility for financial ­services, credit unions and insurance, called the heads of all main general insurers and the industry lobby group, Insurance Ireland, to his office in May to question why they had not reduced premiums.

He said they would be summoned to a second meeting in July, by which time they will be expected to have taken action to reduce claims costs for customers and businesses.

Asked what would be done if there was a perception then that premiums had not fallen sufficiently, he said Finance Minister Michael McGrath would consider options to force more premium reductions.

Asked why premiums were rising, the industry lobby group Insurance Ireland said motor premiums had ­decreased by around 40pc since the first quarter of 2017.

It said the average insurance premium in the Republic was now €670, compared with €1,100 in Northern Ireland and Britain.

Insurance Ireland said it was important to note the increase in road fatalities and the fact that the recent Central Bank motor report for 2022 showed both the number and overall cost of damage claims increased that year and was high relative to previous periods.