In 2023, the average motor insurance premium in Ireland is understood to have risen by 2%, according to the National Claims Information Database. This is the first time in five years that the average has risen.
Following the 2% rise, the average insurance premium is now €568, in Ireland.
This increase is due to the rise of the average cost per claim last year. A 5% rise in 2023 would bring the average figure to €369.
In 2023, the cost per policy of damage claim also climbed to €178. This increase was due to the inflated average cost and a higher frequency of damage claims in Ireland.
The Director of Economics and Statistics of the Central Bank, Robert Kelly, of Ireland spoke about these changes.
“Claims costs have increased, returning to pre-Covid levels and we note a change in the composition of claims…The frequency and costs of damage claims have increased, while the frequency and costs of injury claims have decreased.”
It is understood that motor insurers in Ireland grossed €1.29 billion in 2023 through premiums, a similar figure to 2022. This figure includes making €105 million from operating profits.
The profit would represent 8% of the total income of the sector in 2023, down by 4% in 2022.
Speaking on these figures, Robert Kelly said; “The market was profitable in 2023 with insurers operating profit being 8% of total income…The enhanced data collected for this report allows us to see that an operating loss of 1% on current year claims was offset by reserve releases on prior years which contributed 9% to the operating profit.”
A reduction in profits would be partly due to the cost of settled claims in 2023. These costs hit €693 million in Ireland, the highest figure in eight years.
The average cost of settled damage claims rose by 118% higher than the average between 2015 and 2019. Meanwhile, the costs of settled injury claims were 25% lower than average in this period.
This figure then increased by almost another 25% in 2022, making it the lowest cost of settled injury claims since 2015.
The reports indicate that the average wait time for policyholders to settle their claims was an average of 1.9 years. 45% of claims were settled directly with an insurer.
Those who did not have their claims settled directly with an insurer would go on to have their situation resolved by either the Injuries Resolution Board or through litigation.
The Injuries Resolution Board settled 17% of claims, taking an average time of 2.7 years.
37% of claims were settled through litigation, taking an average time of 5.1 years.
Claims that were settled using personal injury guidelines were over 33% lower for claims that were settled before the Injuries Resolution Board. They were 39% lower for claims that settled immediately after the resolution board when being compared to claim settlements in 2020 under the Book of Quantum.
Robert Kelly would comment on these figures by saying: “Significant reductions in average claim costs are seen in the Direct and Injuries Resolution Board channels…It is still not possible to determine the full impact of the Guidelines on claims settling through litigation.”
“This is important to note as 76% of all injury costs were associated with litigated claims. However, the report details decreases in the average compensation costs for the 84% of claimants whose claims settled for less than €100K in the litigated channel.”
Inflation in the Irish economy was responsible for the increased average premiums last year, explained insurance Ireland. Last year, the inflation was understood to be an average of 6.3%.
Insurance Ireland would also state that the trend of increased damage claims costs continued and more use of litigation to settle these claims would contribute to the erosion of the impact of reforms.
“Today’s figures published by the Central Bank reaffirm that insurers followed through on their commitment to pass on the benefits of Personal Injuries Guidelines and other reforms to consumers,” said Insurance Ireland.
“Although premiums have begun to increase, reflecting the increased cost environment, Irish motor insurance customers have benefitted from significant decreases from 2017 to 2022, where premiums decreased by 23%…This demonstrates that consumers have been cushioned from the impact of the significant cost inflation of the last couple of years.”
According to the Alliance of Insurance Reform, the increased average in premiums was likely just the beginning of more significant rises. “This is likely the thin end of the wedge as recent CSO figures showed the cost of motor insurance was up by 10.3% in the year to September.”
“Premiums had come down in recent years thanks to the Government’s programme of reform and greater competition. Whilst inflation has undoubtedly contributed to the increased cost of vehicle repairs it has begun to stabilise now, and we need this to quickly result in premium stability for policy holders too,” said Brian Hanley, the CEO of the Alliance of Insurance Reform.
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