Blue Sky Insurance
High motor insurance costs could hold back the construction industry
Construction workers returning from abroad are being driven away by the cost of car insurance
The skill shortage in Irish construction right now is acute. According to the SCSI/PwC Construction Market Monitor Report for 2018, there is between a 53 per cent and 84 per cent shortfall in the number of people needed to build Ireland’s housing and commercial stock at the moment, and the call has gone out to those who left Ireland during the harshest days of the recession to return home and help build the new houses we need.
However, the cost of living is proving to be a barrier to many and one issue related to motoring is a real turn-off. A survey of returning construction workers found that 41.4 per cent say that the cost of car insurance is a serious issue.
“Reports indicate that the combination of current problems in housing, motor insurance, and banking will result in a dearth of a much-needed skilled labour force in Ireland. Insurers will either not quote returning emigrants or will make it prohibitively expensive for them to take out insurance,” David Shaw, director of XS Direct Insurance told The Irish Times.
It’s worth pointing out that XS Direct Insurance has some skin in this game – it says that it has developed an insurance product specifically aimed at returning construction workers, enabling them to at least get on the road and start building up their no-claims discount again. According to XS’s research, though, it’s something of a lone voice in the market.
As a test case, XS created a fictional returning construction worker and set about trying to find quotes from Ireland’s major insurers. This fictionalised builder was 40, living in Blackrock, Co Dublin, with a full Australian licence, looking to insure a 2013 Peugeot 508 with a 1997cc engine. The worker would have been living in Australia for the last five years, returning to Ireland at the start of 2018.
The cost of the quotes? Well, actually no quotes were available, with Aviva, Axa, Liberty, and Allianz all saying that they would only be prepared to quote once the person had a least a year’s no-claims discount in their own name.
The name issue is a definite problem. “While some insurers will quote for a person who has had their own policy and driving experience in Australia, their acceptance criteria are very restrictive, and do not take into account two main factors that will preclude most of the returning workers from getting insurance,” said Shaw. “The Australian system is fundamentally different to ours – many people opt for the cheaper option which is an open policy – meaning the car is insured but the driver is not named on the policy. Not everyone who moved “down under” to work bought a car and had their own policy – in fact, from what we have seen most did not.
“Ireland will need more construction workers if our building sector is to fully recover and our housing crisis is to be solved. Earlier this year the Central Bank released a report supporting this contention, and stating that as construction output picks up, the sector is likely to require a significant inflow of labour from abroad to fill vacancies created by this renewed demand. Figures in this report demonstrate that a significant percentage of the huge numbers of construction workers who emigrated between 2008-2012 have yet to return home.”
A spokesperson for Insurance Ireland, the group that represents Irish insurers, said the industry is doing its bit. “Insurance Ireland undertook a series of actions in 2017 to address the issues experienced by returning emigrants and the actions taken are having a positive effect,” said the spokesperson. “This includes the implementation of a protocol agreed between Insurance Ireland and the Department of Finance to ensure a greater consistency of treatment for returning emigrants. The protocol covers how insurers consider driver experience from abroad when a person has previous driving experience in Ireland, and is coming from a country that drives on the other side of the road. The protocol was introduced in the second half of 2017 and since then the number of cases referred under the Declined Cases Agreement for drivers from overseas has almost halved.”
Shaw thinks that’s not enough, though. “These issues need to be addressed – we do not want insurance to act as a barrier that will deter our much-needed skilled construction workforce from living in Ireland. At XS Direct we have developed an affordable insurance policy with these people in mind – people that other insurers simply don’t want to deal with because they can’t show a no-claims discount cert,” he said. “We’ve identified the costs involved in driving as a source of major frustration for our returning work force. One respondent actually said that the ‘cost of car insurance is going to force us back to Australia’. The onus is now on the Government and the motor insurance industry to ensure that we don’t lose our workforce for the second time in recent years.”