When the Central Statistics Office recently released inflation figures for April, it looked like good news all round for consumers. The cost of mortgages, clothing, shoes, food and air travel are all falling significantly after years of prices that petrified tourists and prompted cries of "rip-off Ireland".

However, a closer look showed one area where consumers are now paying way more than they did a year ago, and that insurance premiums. The cost of home insurance has increase by 22.5% over the past 12 months despite the fall in property prices and building costs. Motor insurance also rose by 12.9% in the same period despite 2008 being the safest on our roads since records began. A recent assessment of the insurance sector by Bloxham Stockbrokers concluded that we are in a "bullish pricing environment", which essentially means it is a good time to increase prices. What's going on?

Michael Horan, manager of non-life insurance with the Irish Insurance Federation, said premiums have been rising as a result of an increased cost of claims in 2008.

"Premiums are dictated by claims costs, and motor and household claims costs both increased significantly in 2008. Premiums had been falling for five years up to then but they bottomed out in 2008 and have been rising since… There has been a marked increased in household claims costs because of the bad weather we had last year. We had the severe flooding in August which flowed through into higher claim costs - we had about €96m worth of flood claims with about half being household claims and the rest commercial. Similarly in motor insurance we have seen an increase in claims costs and numbers generally," he said.

Traditionally, recessions mean that insurance claims will rise, as people are less willing to pay the cost themselves if something relatively minor goes wrong. This is a likely factor in the increase in motor insurance premiums particularly, said Horan.

In recessions, some people also go to extreme lengths when they hit financial hardship, resulting in an increase in fraudulent claims. However, this is no ordinary recession: we have emerged from 10 years of boom where compensation culture was less prevalent with tougher legislation and more advanced detection methods reducing the chances of fraud.

"We have the anti-fraud hotline, Insurance Confidential, and an anti-fraud claims database called Insurance Link which shows patterns that indicate a claim might be fraudulent. We have put a lot of effort in over the last number of years to get the message over that fraud is stealing from honest policy-holders – that the cost of fraudulent claims pushes the cost of premiums higher than they need to be and that people who are making such claims are in effect stealing from policy-holders. Anything that goes into increasing claims costs will have an effect on premiums," said Horan.

The poor performance of insurance providers' equity investments in the wake of the subprime and banking crises is also a likely driver of increased premiums, said Brian McNelis, director of general services with the Irish Brokers Association.

"Insurance reserve funds are under threat from depressed equity markets. Many of the insurers' reserve funds have been badly hit as a result of the recent financial problems. They have become more cautious following these and other issues in the global insurance market, by shoring up their reserves and taking a much more conservative approach to pricing. All of this is leading to a 10% to 20% increase in overall general insurance premiums," he said.

However, Dermott Jewell, chief executive of the Consumers Association of Ireland, described the escalating premiums as "outrageous", saying that increased claims costs caused by things like fraud shouldn't have resulted in the rises we have seen.

"The costs associated in very many of these claims are significantly down anyway. They also have assessors who are ruthless at the best of times when it comes to paying out on a claim. All of the benefits are stacked in favour of the insurance companies," said Jewell.

With prices rising, it is up to the consumer, now more than ever, to get the best deal available. Shopping around will ensure this. It will take some time and patience – though a broker could do this for you if you wish – but the financial rewards can be considerable.

The Financial Regulator's most recent survey on home insurance found that premiums varied wildly and consumers could save up to €400 by shopping around. Though cost-comparison websites are thin on the ground in Ireland (and sorely needed), the web is still useful when it comes to insurance. Sites like www.chill.ie and www.123.ie can offer significant savings. The key message is that loyalty to a single provider rarely benefits the consumer.

"Regardless of the insurance, consumers every year should have some trawl of the market, whether by phone or internet, to see what is available. Consumers rarely go back to their provider and say 'I've got a cheaper quote, can you match it or do better?' Insurers will do it. You should never automatically renew. Consumers need consistently to demand a better deal on every occasion. There has to be some pressure put on the industry. If not, prices will stay high," said Jewell.

It is also important to provide as much information as possible: the Financial Regulator's survey on home insurance found that providers were willing to give discounts for a wide variety of reasons, such as a resident being usually in the house during the day, the age of the house, the bundling of insurances, and so on. Increasing the excess you are willing to pay will also reduce your premiums.

"People sometimes think insurance is one monolithic product and that the cover is identical between insurers, but it isn't. Some policies have more benefits than others, and depending on what benefits you want, you can shop around to look for the best policy for you in terms of price and cover," said Horan.