The cost of motor insurance claims jumped by almost one quarter in the 12 months to the middle of last year, new figures published by the Central Bank suggest.
The bank’s National Claims Information Database (NCID) midyear report on the motor insurance and the employer and public liability markets paints a largely gloomy picture for consumers, businesses and the insurance sector with surging inflation driving the jump in the value of claims.
The report is a key source of claims data containing analysis on their cost, how they are settled and the various component costs that make up settlements.
The total cost of private motor claims in the first half of 2024 reached €414 million, up 38 per cent on the pre-Covid average and 23 per cent higher than the same period a year earlier.
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The surge was primarily driven by damage claims, which have risen by 179 per cent when compared to the 2015–2019 average.
When it comes to employers liability and personal liability the total cost of claims settled between January and June last year was 12 per cent lower than the pre-Covid average and 10 per cent lower than the previous year.
The decrease was primarily driven by injury claims with a total of 42 per cent of all employer’s and public liability injury claims settled under the personal injury guidelines over the period.
The Alliance for Insurance Reform said the report “makes clear the Government’s looming increase in personal injury awards couldn’t come at a worse time” for policyholders.
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“The only bright spot had been the reduction in the cost of injury awards and now the Government is set to increase these by 17 per cent,” said Tracy Sheridan, owner of Kidspace play centres in Rathfarnham and Rathcoole and a member of the Alliance board.
“If this happens, there will be no check on costs. We are already seeing month-on-month premium increases as the cost of living continues to spiral out of control. The Government needs to stand up for policyholders, not make things more difficult for them,” she argued.
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Moyagh Murdock, the chief executive of Insurance Ireland, the umbrella group for the sector, noted that recent reforms have meant Ireland has “benefited from a thriving and attractive insurance market and consumers and businesses have benefited from lower costs”.
However she suggested that the Central Bank claims data served as “a reminder of how fragile these gains are, and the impact inflation can have on the insurance market.”
She noted that the total costs of claims settled in the first half of 2024 was higher than any period over the last decade and up 23 per cent on the same time last year.
Ms Murdock said that the percentage increase “tells its own story. In an inflationary environment, where claims costs are more likely to rise, Government needs to remain focused on measures introduced to keep costs down”.
However she said that “inflation is only part of the picture. This data illustrates that more action needs to be considered to increase use of the Injuries Resolution Board as it is clearly the most time-effective and cost-effective solution for claimants.”
She said the data demonstrated how claimants “receive the same compensation going through the IRB as through the litigated route but in a much shorter time frame”.
Ms Murdock expressed the view that it was “also clear that now is not the time to introduce an increase to the personal injuries guidelines of 16.7 per cent as recommended by the Judicial Council. This would clearly add even more cost into the system.”
