Motor insurance costs rose slightly in first half of 2023

July 3, 2024

Average motor insurance premiums rose marginally in the first half of last year, compared to the year before, new data from the Central Bank has shown.

Premiums increased by 0.5% to €561 during the period after a decreasing trend that had been seen since the second half of 2017.

However, the small increase in premiums came despite a notable 20% jump in settled claim costs between January and June of 2023, compared to the half year average recorded between 2015 and 2019.

This followed a period during the pandemic where claims cost were lower, the mid-year update of the National Claims Information Database (NCID) for motor insurance says.

The leap in claims costs was driven by a 126% rise in damage costs, which more than offset a 21% drop in injury claim costs.

Insurance Ireland said that while premiums rose slightly, the level of inflation in the wider economy was much higher and they have still decreased by more than 20% since 2017.

It said this shows that the Government’s insurance reform agenda is working and insurers are delivering for consumers.

“This is in contrast with the insurance market in the UK and Europe, with the Government’s reforms and the industry’s strong commitment to deliver for consumers having insulated the Irish insurance market against the steep increases in costs and premiums seen in neighbouring countries,” said Moyagh Murdock, chief executive of Insurance Ireland.

“However, there are some worrying trends that could impact over time such as the concerning increase in road collisions, a contributing factor to the sharp increase in damage claim costs and the continued pattern of claims going the litigated route.”

“Successive NCID reports have consistently shown that the litigated channels still accounts for the vast majority of claims costs, despite the fact that litigation is slower and doesn’t actually deliver better outcomes for claimants, with most of the additional cost going to legal fees.”

The report shows that the personal injury guidelines introduced in 2021 have had a significant impact on the average settled cost for claims settling directly with an insurer, or through the Personal Injuries Assessment Board in the first half of 2023.

“However, the personal injuries guidelines have not yet materially impacted the cost of claims settled via litigation,” the report states.

“Claims settled via litigation represent the largest proportion of the total injury claims cost.”

Meanwhile, the NCID mid-year update for public and employers’ liability insurance shows settled claims costs were 2% higher in the first half of last year than the 2015-2019 average.

Injury claim costs fell just 0.2%, but damage claim costs leapt 31%.

The report says the personal injury guidelines have had a significant impact on the average settled cost for claims settling directly with an insurer, or through PIAB during the six months.

But they have not yet materially impacted the cost of claims settled via litigation and claims settled through this route represent the largest proportion of the total injury claims cost.

The data also the difference in average public liability awards settled through litigation rather than through the Injuries Resolution Board is very small, but legal fees are on average 22 times higher.

“This shows the effectiveness of the Injuries Resolution Board in resolving claims and providing fair awards,” said Tracy Sheridan, owner of Kidspace play centres in Rathfarnham and Rathcoole and Board member of the Alliance for Insurance Reform said.

“In most cases, the only ones that benefit from settling though the litigation channel are the legal profession.”

She added that while it is positive to see an increase in claims settled via the Resolution Board, the number of cases being settled via litigation remains stubbornly high.

“It is highly unlikely a majority of these claims are contentious and in those instances there is simply no reason not to settle via the Injuries Resolution Board – it is quicker, cheaper and the awards are the same,” Ms Sheridan said.

“There are 17% fewer liability claims relative to pre-Covid levels and in the context of this, the delivery of the Government’s insurance reform programme and record-breaking insurer profits of late, it is unconscionable that businesses, sports, arts, community and voluntary organisations are not seeing meaningful reductions in their premiums.”

Insurance Ireland said it is confident that in the employers’ liability and public liability market, Government reforms will impact over time.

Commenting on today’s report, Brian Hanley, the chief executive of the Alliance for Insurance Reform, said the number of cases being brought to the injuries assessment board had risen, but around 72% of cases were still settled through litigation.

He said the report shows that the awards given to claimants by the injuries board and in litigation for public liability claims as now “virtually identical”.

But he added that legal fees as a percentage of the award in public liability cases continue to rise specifically. Legal fees in 2020 roughly added a further 73% to an award, he said.

Speaking on RTÉ’s Morning Ireland, he said the majority of cases could be better addressed by the injuries assessment board.

He said premiums for public liability had not budged and, if anything, were increasing.

“There has been no meaningful or considered change in premiums, which remain stubbornly high despite all the reforms the Government has introduced,” he stated.

Mr Hanley said some things needed to occur for this to change, such as an increase in competition in the public liability market.

“The insurance market in Ireland today is much more stable and indeed profitable. We are at a time where we see record profits in this area from a number of insurers, so it is a profitable area,” he stated.

He said that without competition “downward pressure on premiums is still missing.”

Mr Hanley said motor insurance premiums are an example of the benefits of competition in a market.

Article Source – Motor insurance costs rose slightly in first half of 2023 – RTE

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