There’s a mixed picture in the motor insurance market across the Republic of Ireland, as claims incidents decrease, admin costs drop slightly, but premiums and settlements continue to rise.
The latest report by the Central Bank shows car insurance premiums have risen by 62% in the last 5 years, with the average claim costing 64% more than 2013. On the flipside the number of claims overall has dropped 40% in ten years, with injury claims falling by 20% over the last decade. The average cost of settling a claim was 4779 euros in 2018, up about 60% over the last ten years.
For the insurers who remain in the Irish market, the good news is that claims costs, as a percentage of car insurance premiums raised peaked at 94% in 2014, but this has fallen back to 60% by 2019. This has prompted calls from some politicians in Ireland for insurance companies to be compelled to lower their prices. Others might say there is still a long way to go when it comes to eradicating compo culture. It’s swings and roundabouts. really.
About half of all injury claims 2015-18 were settled directly, between policyholder and insurer, with about 33% going through litigatuion, according to the report. Those that required legal representation tended to take much longer to settle, with a typical lifespan of 4.4 years, but they resulted in a larger payout, around 45,000 euros per claim on average. Plus legal fees of about 23,000 euros on average – that’s right, the lawyer fees were HALF as much as the settlement the claimant received.
Commissions paid accounted for about 11% of gross underwriting costs in the motor sector, which probably sounds like a healthy margin for many consumers. But those same consumers would be shocked to learn that the typical mark up on something like designer silver jewellery can be 300-500% on the UK High Street.
In the last few years an estimated 250 insurance companies have left the Irish market with many sports events cancelled, activity and play centres closing and leisure events like Oktoberfest cancelled, all due to rocketing public liability insurance costs.