Business

Motor insurance premiums unchanged in first half of 2023 even as damage costs soared

Central Bank report suggests cases are settled faster through Injuries Resolution Board than litigation route

Motor coverage premiums fell by 21 per cent between their high point in 2018 and the middle of last year, according to a Central Bank report drawing on figures from its national claims information database.

Joe Brennan
Tue Jul 2 2024 - 05:39

The average Irish motor insurance premium was flat in the first half of 2023 at €561, compared with the same period for the previous year, even as settled claims costs rose more than 50 per cent across the industry to €358 million, according to data from the Central Bank of Ireland.

Motor coverage premiums fell by 21 per cent between their high point in 2018 and the middle of last year, according to a Central Bank report drawing on figures from its national claims information database (NCID).

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Settled damage costs rose 70 per cent on the year to €188 million for the first half of 2023, driven by rising costs for spare parts and labour amid the spectre of inflation across the wider economy. Injury costs rose 39 per cent to €171 million over the period.

The number of cases settled as a result of litigation rose during the period, most likely driven by cases stemming from accidents before judge-approved guidelines were introduced three years ago.

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Some 61 per cent of claims settled in the first half were settled under the guidelines. The Injuries Resolution Board’s (IRB) latest published annual report shows that its average award for 2022 had fallen by one-third from 2020, before the guidelines came into effect.

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The latest report highlights, once again, how there is little to be gained for personal injury claimants going the litigation route, which takes longer than cases settled through the IRB, formerly known as the Personal Injuries Assessment Board (PIAB).

“In motor, the guidelines have reduced average claims costs in the direct and [IRB] settlement channels, but have not yet had a measurable impact on claims in the litigated channel,” said Hazel Rock, head of insurance services at Brokers Ireland.

The average award for litigated cases where claims were for less than €100,000 – 94 per cent of claimants – was €20,453, while the average associated legal cost was €17,837, according to Central Bank. The average for an IRB settlement was €16,361. However, the legal costs of claims settled through this route was just €564.

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Moyagh Murdock, chief executive of Insurance Ireland, claimed that the latest Central Bank report shows that insurers “have followed through on their commitment to pass on the benefits” of the guidelines, which were affirmed in April by a landmark Supreme Court ruling.

A separate report on employers and public liability as well as commercial property coverage – typically sold to businesses as a package – showed that the cost of settled claims rose 26 per cent on the year to €153 million across the industry. Injury claims accounted for 91 per cent of the total.

Joe Brennan

Joe Brennan

Joe Brennan is Markets Correspondent of The Irish Times

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