Consumer Skills
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30th March 2009

CONSUMER COUNCIL SAYS CONSUMERS PAY TOO MUCH FOR INSURANCE IN NORTHERN IRELAND

The Consumer Council says that the £500 million Northern Ireland (NI) car, contents and buildings insurance market is not working for consumers. On average, households here are shelling out a staggering £278 more per year compared to Great Britain (GB) – some pay as much as £695 more. The startling findings come today as the Consumer Council’s new research report into the cost of insurance in NI is launched by OFMdFM Junior Minister, Gerry Kelly, MLA. The Consumer Council is now calling for further investigation into why consumers are getting such a raw deal when it comes to buying insurance. They also cautioned that many households are not insured and stressed that consumers can make significant savings today by shopping around, even with the exorbitant prices.

Eleanor Gill, Chief Executive of the Consumer Council said: “The car, contents and buildings insurance market is clearly not working for consumers.  Compared to GB, households here are paying nearly 40 per cent more, leaving consumers £160 million[1] worse off per year.  While we are all hit hard, some households are hit particularly hard;
 

  • Consumers with car insurance pay 84 per cent more on average (£282) than in GB; and
  • Households with car, contents and buildings insurance in rural areas pay 62 per cent more on average (£362), and households in low income areas pay 48 per cent more on average (£345) than in GB.

“A recurring frustration for consumers here is that many attractive insurance offers come with the tag ‘not available in Northern Ireland’.  Our research confirms that we do have less choice of insurance providers – the maximum number offering quotations for car insurance here was 15 compared to 51 insurers in GB.”

“Another worrying aspect of this research is that a third of consumers do not have their homes insured[2].  When asked why, they tell us that they can’t afford it or haven’t got round to it.  There is a potential disaster waiting to happen for these households if something goes wrong so there must be an urgent drive to increase consumer protection.”

Turning to the way in which consumers can save money when buying insurance, Eleanor Gill continued, “A key message that we want to get across to all consumers today is that even with the higher costs and fewer number of insurance providers, consumers can still save money.  By shopping around there is an average saving of £389 per year to be had.   

“There are opposing views on the reasons why insurance here costs so much more.  The problem could lie with the practices of the insurance companies, the legal system, the consumer or any combination of the above.  Further investigation is urgently needed, particularly at a time when all households and businesses are trying to keep their costs down.  The Consumer Council is committed to working in partnership with OFMdFM, the insurance industry, the legal sector, Financial Services Authority and consumers themselves to get answers and lower insurance costs.  We commend the associations for insurers and brokers[3] and the Law Society for continuing to work with us as we try to understand why insurance costs more here.  Consumers need insurance that is fair, affordable and that is appropriate to their needs.  To that end, the Consumer Council will be focusing on encouraging more switching and a greater uptake of insurance protection for consumers.” 

ENDS

 

Notes to the editor

 

Examples of how much more households in NI pay for car, contents and buildings insurance:

·       A household headed by an older person in a low income area would pay £816 for their insurance in Belfast compared to £575 in Glasgow.

·       A household headed by a younger person in a low income area of Fermanagh would pay £1,366 compared to £777 in a rural part of East Anglia.

Examples of savings made by consumers shopping around:

·       Robert was offered a renewal quote for £654 for his car insurance.  When he shopped around he got a quote for £420.  Not only did he save £234, he upgraded his insurance to fully comprehensive cover.  That’s a total saving of £230 and a better policy.

·       Phil shopped around for her contents insurance and after two phone calls saved £20 – that’s two weeks worth of electricity.  She then decided to shop around for her pet insurance.  After checking online and phoning a few brokers she managed to save £78.  That’s a total saving of £98.  

 

  1. The Consumer Council's research report "Quote...Unquote" is being launched at the Stormont Hotel today (Monday 30 March) at 12 noon.
  2. Consumer Council media contact: Paula Gunn, telephone, 028 9067 4816 or e-mail, [email protected]
  3. The Consumer Council is an independent consumer organisation, working to bring about change to benefit Northern Ireland’s consumers. The Council campaigns for high standards of service and protection and a fair deal for all. It also carries out research, gives advice and publishes reports and other publications. It deals with individual complaints about buses, trains, planes, ferries, natural gas, electricity, coal and water.
  4. For more information, visit our website at www.consumercouncil.org.uk



[1]Based on NI Households paying £278 more than in GB by the number of qualifying households in Northern Ireland.

[2]30 per cent of consumers in NI do not have contents insurance and 36 per cent do not have buildings insurance.

[3]The Association of British Insurers and the British Insurance Brokers’ Association.

 

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