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Cost of car insurance rises by 42% despite an overall reduction in number of claims

Figures showing the average cost of premiums and payouts were released by the Central Bank today.

Image: Shutterstock/Kwangmoozaa

THE AVERAGE COST of motor insurance in Ireland has risen by 42% in the last decade despite a 2.5% reduction in the average cost of individual claims over the same period.

Details contained in the Central Bank’s first Private Motor Insurance Report of the National Claims Information Database (NCID) also shows that between 2009 and 2018, the overall frequency of claims by motorists fell by 40%.

That figure included a 20% reduction in the number of injury claims and a 43% reduction in the number of damage claims.

The NCID was established following a recommendation by the Government’s Cost of Insurance Working Group (CIWG).

The publication of today’s figures form part of a commitment by the Central Bank to improve transparency in Ireland’s insurance market and to promote a greater understanding of issues relating to how it functions.

The statistics also show that injury claims which were settled through litigation between 2015 and 2018 had an average compensation cost of €45,390, as well as average legal costs of €23,031.

However, the Central Bank warned that these figures included a number of “very large settlements” which had a significant impact on the statistics.

Litigated settlements costing more than €100,000 accounted for around 15% of claimants over the three-year period, but accounted for 53% of total litigated costs.

By comparison, the 85% of injury claims worth less than €100,000 which were settled through litigation had an average compensation payout of €23,199, with average legal costs of €14,684.

These figures compared with average compensation of €22,631 for those who settled through the Personal Injuries Assessment Board, where average legal costs were €753.

Mark Cassidy, director of economics and statistics at the Central Bank, hailed the figures as a positive step for data availability.

“The Central Bank is focused on ensuring that the insurance sector sustainably serves the needs of the economy and its customers,” he said.

“This includes ensuring that claimants can have confidence that insurance claims will be paid when required and that consumers have clear information to allow them to make informed decisions.” 

The drop in the number of claims saw the average cost of claims per policy fall by 2.5% from €437 in 2009 to €426 in 2018 – including a drop to €375 in 2013.

But the average premium per policy increased by 42% from €498 in 2009 to €706 in 2018. That included a small decrease to €435 in 2013, followed by an increase of 62% to €706 last year.

However, the Central Bank said that this data highlighted the importance of the cost of claims to the level of insurance premiums.

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It added that the report showed the cyclicality of the insurance market, in particular the growth in insurance premiums relative to the cost of claims.

“While the Central Bank does not have a mandate to fix prices in the insurance sector, today’s report will assist the Cost of Insurance Working Group, Government, Oireachtas and wider stakeholders in their consideration of the relevant issues,” Cassidy added.

But Sinn Féin TD Pearse Doherty described the figures as a shocking indictment of the insurance industry, which he said had waged “a campaign of disinformation” for a number of years.

“The ‘compo-culture’ line trotted by the industry was a convenient story to cover its own price-gouging activities,” he said. “That line does not stand up to scrutiny.”

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