The Central Bank of Ireland has published the first annual Private Motor Insurance Report of the National Claims Information Database aimed at providing more transparency in the motor insurance sector and the figures released make shocking reading for hard pressed Irish motorists.

The figures show that since 2009, while the cost of claims per insurance policy has gone down by 2.5%, at the same time, the average motor insurance premium has gone up by a massive 42%. The figures also seem to indicate that the idea that high levels of personal injury claims are causing premiums up, as often cited by the insurance companies, is unfounded. 

The National Claims Information Database (NCID) was established as a result of a recommendation of the Government’s Cost of Insurance Working Group (CIWG). The statistics are based on data gathered from insurance undertakings providing private motor insurance products in Ireland, including foreign companies selling into the Irish market.

Some of the key statistics highlighted in the report are:

The average motor insurance premium increased by 42% between 2009 and 2018, despite the cost of claims falling by 2.5% during the same period.

The average cost of claims per policy decreased by 2.5% from €437 in 2009 to €426 in 2018. 

Average premium per policy increased by 42% from €498 in 2009, to €706 in 2018. This was after a fall in average premium to €435 in 2013, meaning premiums increased 62% during the following five year period.

During the period 2009  to 2018, the number of actual claims reduced by 40%, with injury claims down 20% and damage claims reduced by 43%. However, the average cost of a claim increased by 64% during the same time period, with high litigation costs a driving factor. Over all this meant that the cost of claims per policy actually fell by 2.5%.

In 2018 claims made up on average 60% of premiums.

In the period from 2015 to 2018, 53% of all injury claimants settled directly while 31% of injury claimants settled through litigation. Injury claims settled through litigation had an average compensation cost of €45,390, with average legal costs of €23,031.  16% of claims were settled through the Personal Injuries Assessment Board (PIAB).

Directly settled injury claims had an average compensation of €11,674, including legal cost of €1,385, with claims settled in under 2 years, as opposed to 4 years in litigation.

The new data also indicated that the private motor insurance industry is generating an operating profit of around 9% while corresponding average level of profit in the UK is 5%.

Commenting on the findings, Peter Boland, director of the Alliance for Insurance Reform, said, “This data lays bare the scale of the greed that has driven the current insurance crisis, enriching insurance companies and lawyers at the expense of Irish motorists struggling to make ends meet. Our members are furious and we demand immediate reductions in motor insurance premiums to sustainable levels, an urgent acceleration in the real reform programme from Government and an injection of decisiveness from key ministers.”

Speaking on behalf of the Law Society of Ireland, Ken Murphy said “Today’s data vindicates what the Law Society has been highlighting for years. Neither claims costs, nor legal fees, could possibly account for, or justify, the massive increases in the premiums motorists have been compelled to pay by extremely profitable insurance companies.”

Pearse Doherty TD, Sinn Féin’s Spokesperson on Finance and on Public Expenditure and Reform said, “The data confirms two things. Firstly, Ireland does not suffer from some sort of delinquent “compo-culture”. The frequency of claims has fallen by 40% in the past decade, with the cost of claims per policy falling by 3%. What we have is an insurance industry that is marked by a “rip-off culture” and by an aggressive PR strategy to hide it.” Adding, “Secondly, motor insurance premiums have sky-rocketed with little correlation between them and the cost of claims. Since 2013, premiums have gone up by 62%, increasing every year.”

To address the situation Sinn Féin is proposing a Consumer Insurance Contracts Bill to shift the balance of power towards the consumer and away from the industry.

Overall the data confirms what many in the motor industry have known for many years, namely that insurance companies are over charging for premiums and hiding behind a smoke screen of rising personal injury claim costs.

The insistence by Insurance Ireland that rising claims costs make premium increases inevitable is simply not supported by the Central Bank statistics. With this data now in the public domain, and more being sought, it will hopefully become increasingly difficult for the insurance sector to justify its profiteering practices.