What’s to blame for Northern Ireland’s high insurance costs?

Northern Ireland’s high car insurance rates can be blamed on a number of things, with experts saying that the region’s ‘compensation’ culture, bad driving, high legal fees, and a lack of competition between car insurance companies all bear a part of the blame.

The average driver in Northern Ireland pays in excess of 10 per cent more for motor car insurance than those living in England, Scotland, and Wales, according to the Office of Fair Trading.  Some insurers have blamed the higher rates on the expensive court system in NI, pointing to the whiplash injury claims sector in particular, as payouts to claimants are anywhere from £10,000 to £22,000 more than those in Wales and England.

The Association of British Insurers’ James Dalton stated that Northern Ireland’s compensation system’s scale costs are higher by a significant margin than they are in Great Britain.  Insurers need to bear these costs, he continued, which leads them to be passed on to NI consumers in the form of much higher premium prices.

However, lawyers instead say that referral fees are the root of the problem.  Referral fees, which are payments made to insurers from claims management companies and solicitors in regions outside Northern Ireland in exchange for the personal details of insurance customers who have been involved in motor accidents.

Northern Ireland solicitors have been lobbying hard for a blanket ban of the practice, with the Law Society of Northern Ireland stating that referral fees have led to approximately £2 billion in extra costs to insurance customers living in Wales and England.  Northern Ireland already forbids solicitors operating within its borders to pay referral fees to insurers.

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