Motor insurance premiums in Ireland increased by 42% between 2009 and 2018 – however, the average cost of claims per policy decreased by only 2.5% during the same period.
The figures, revealed the Central Bank of Ireland’s first private motor insurance report of the National Claims Information Database (NCID), also showed that the frequency of claims fell by 40% in the same 10-year period.
The report is based on data gathered from insurance providers with private motor insurance products in Ireland – including foreign companies selling into the Irish market.
“The data highlights the importance of the cost of claims to the level of insurance premiums,” the Central Bank said in a statement. “However, the report also highlights the cyclicality of the insurance market, in particular the growth in insurance premiums relative to the cost of claims, and the growth in profitability of motor insurance underwriting since 2015.”
Michael D’Arcy, the Minister of State with responsibility for Financial Services and Insurance, told Irish broadcaster RTÉ that the report showed that both the insurance and legal sectors are culpable for the skyrocketing price of motor insurance.
“I believe that the NCID report also demonstrates why we must address award levels in this country if we want to see cheaper insurance premiums and an increased risk appetite from insurers,” said D’Arcy.
Reacting to the figures, Peter Boland, director of the Alliance for Insurance Reform, called for a reduction in auto insurance premiums to sustainable levels.
“Today’s motor insurance 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,” Boland told RTÉ. “This situation has been enabled by a Government too slow to react to the crisis and too weak to take on the big vested interests in order to make a difference.”
Meanwhile, Insurance Ireland interim CEO Gerry Hassett told RTÉ that the figures show that claims costs are key in the auto insurance market.
“The largest cost in motor insurance is the cost of claims and this database definitively shows claims costs are the key challenge in the market,” said Hassett. “New guidelines for compensation awards are urgently needed in 2020 to address these costs.”
