THE FREQUENCY OF motor insurance claims dropped by 26% last year as people travelled far less due to the Covid-19 pandemic.

This decrease was also reflected in claims costs which fell by 20% last year, according to statistics contained in the Central Bank’s third annual Private Motor Insurance Report.

Based on data from the National Claims Information Database (NCID), the report is the third of its kind since the database was established.

Premiums dropped by 7% last year and have fallen by 16% since quarter 4 of 2017. The report noted that the decrease was influenced by Covid-19 premium rebates, which amounted to €42.5 million

Taking a longer view, premiums have increased by 26% between 2009 and 2020. This was largely fuelled by a 62% jump between 2013 and 2018.

Settlements

The report also provides information on how claims were settled.

Last year, 36% of all claimants settled directly with their insurer. A total of 34% were settled via litigation before a court award.

15% of claims were settled through the Personal Injuries Assessment Board (PIAB) and 13% were settled directly after engaging with the board.

In 2% of cases a settlement was reached via litigation with a court award.

Between 2015 and 2020 claimants that settled directly (before or after engagement with the PIAB) had an average duration of 1.3 years.

Those that settled through the PIAB had an average duration of two years, while claimants that settled via litigation (before or with court award) had an average duration of 3.9 years.

The vast majority (94%) of claims were settled for less than €100,000.

Mark Cassidy, Director of Economics and Statistics at the Central Bank said: “The key findings of the latest report, based on data up until the end of 2020, are clearly affected by the Covid-19 pandemic, with a significant reduction in the number of private motor claims and a subsequent reduction in claims costs. 

“The trend of decreasing premiums that has been evident since 2018 continued last year, with a further decline of 7% in the average motor insurance premium. 

“This included Covid-related rebates offered to customers equivalent to 3% of total premiums paid. Operating profits across the sector last year were 12%.”

Insurance Ireland chief executive Moyagh Murdock said the lobby group welcomes the report.

“It is good to see the downward trajectory in overall motor premiums which is the key issue for consumers,” she said.

“I have always believed that the implementation of necessary reforms and greater stability in the market would deliver clear benefits for consumers and the NCID report provides clear evidence of this.

“Ultimately, reduced costs bring reduced premiums, and Insurance Ireland members remain committed to passing on the benefits of lower costs of claims to customers.”