Recent data from the Central Statistics Office (CSO) indicates that while inflation is slowing across most sectors in Ireland, motor insurance costs are bucking the trend, continuing to climb.
In June, the Irish economy recorded its lowest rate of inflation in nearly three years, at 2.2%. CSO numbers, however, showed that Ireland’s average cost of motor insurance premiums rose by 9% year-on-year from July 2023, marking the 11th straight month of increases.
One reason cited for the trend is the return of heavy traffic, leading to more accidents and consequently more claims that now feature more expensive repairs.
An RTÉ report quoted Peopl Insurance chief executive Paul Walsh as saying: “The total cost of damage claims settled in the first half of 2023 was 126% higher than the 2015 to 2019 average, and this is the main driver for the leap in claims costs.”
Walsh further explained that global inflation has led to shortages in labour and car parts, pushing up repair expenses.
It was also noted that although injury claim costs decreased by approximately 20% in the same period, the fall was not enough to offset the rise in premiums, particularly as roughly 75% of claimants still choose to litigate.
According to a Central Bank report cited by RTÉ, there is minimal difference in the awards for public liability claims settled through litigation versus those resolved by the Injuries Resolution Board (IRB). However, legal fees for litigation are around 22 times higher than those for IRB-settled cases.
Insurance Ireland CEO Moyagh Murdock had this to say about the litigation route: “The litigated channels still account for the vast majority of claims costs, despite the fact that litigation is slower and doesn’t actually deliver better outcomes for claimants.
“37% of claims settle through litigation, making up 79% of total costs for injury claims in motor insurance. This is adding unnecessary cost into the system and prevents insurers from delivering further benefit to consumers.”
Greater competition in the motor insurance market, it was highlighted, could potentially curb premium increases, in addition to a stronger push towards the use of IRB over litigation.
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