Aviva, the insurer formerly known as Hibernian, has followed the lead of rival Allianz and decided that it won’t offer cover to new customers who ask for quotes on cars registered before 2001. In a statement, the company said that its â€œdecision not to provide a new business quote for cars 14 years or older is based on our own claims experience for this segment. By not taking on more of this risk type, we are protecting our broader customer base and our ability to offer sustainable and competitive motor insurance premiums in Ireland.â€
The statement went on to say that existing customers with older cars will continue to be offered cover, as will existing customers who decide to purchase an older car. It is only new business that is being rejected.
It may not be so simple though. At least one Aviva customer we contacted said that the renewal quote he received from Aviva for a car registered in 1990 was far too expensive, so there is a chance that even existing customers will simply be priced out Aviva or out of their cars.
We contacted Aviva for more details on the decision, and we suggested to them that this decision would particularly affect older drivers and those on tighter budgets, as those are the groups most likely to be driving a car of that age.
There are actually a broad range of ages and social groups in that segmentâ€ an Aviva spokesperson responded. â€œOlder cars are certainly not confined to any particular age group. It is actually a small segment for us, but it is still significant in terms of costs. There are a disproportionate amount of accidents involving older cars, and the claims run the full gamut from minor third-party issues to major claims, including deaths.
Risk ratings constantly change to reflect the potential risk of a type of car or group of people and this decision is reflective of that. Our advice to consumers would be to reduce your exposure to that risk, and if not that then there are many other insurers willing to take up that business.â€
There are serious concerns for how people with older cars will now be able to access insurance though. Dermot Jewell, from the Consumers Association of Ireland told us that this is a decidedly unusual decision for a number of reasons. It focuses on the age of the vehicle and ignores the legally required annual NCT which classes it as safe and roadworthy. To have achieved a pass required the owner to have paid out significant sums of money for service and maintenance – this is also ignored. 250,000 vehicles are within this category and two providers within the insurance industry have decided that all are a risk and not to be insured.
Many will not be in a position to change and so they will either stay with their current insurer or risk moving in an environment now where all other insurers will look with some skepticism at the older car and, potentially, add a loading to the cost or increase the excess or more. This will be a matter for close scrutiny over the coming months to see what the follow up activity is to be. We already have seen increases on average of 12 -15 per cent in the past year – if this group are to be singled out then there is need for a review of how the ‘business’ is actually performing.
With two of the largest insurers in the country having taken this decision, a worrying precedent has been set. The average age of cars on Irish roads is still going up, even with the recent boom in new car sales. The average age climbed rapidly from the onset of the recession in 2008, and peaked and leveled off at 8.83 years last year, according to car history experts Cartell. It also means that the largest cohort of Irish registered cars, the 247,000 cars registered in 2000, are now ‘vehicula non grata’ at both Allianz and Aviva.