Motor insurance premiums rose by an average of 9 per cent to €623 last year, more than four times the rate of inflation in the same period, new figures from the Central Bank of Ireland show.
The increase was blamed on the rising cost of vehicle repairs and the fact that injury claims still account for more than half of the overall cost of settling motor insurance claims in Ireland.
The bank’s National Claims Information Database (NCID) full-year report, focusing on the motor insurance and employer and public liability markets, paints a picture of an industry still burdened by high costs.
Despite a drop-off of 1,000 in the number of private motor claims last year, the total cost of settlements rose by €42 million to a record €896 million, up 38 per cent on the pre-Covid average.
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The increase was primarily driven by damage claims, reflecting the high cost of vehicle repairs.
The average cost of a damage claim has risen by 116 per cent since 2010, from €1,033 to €2,236, with 78 per cent of the increase coming since 2020.
“The high inflationary environment in recent years has affected the average cost of damage claims across all claim types,” the report said.
Injury claim costs remained stable between 2022 and 2024, the bank said, noting the average cost of an injury claim in 2024 was €39,537. This was 1 per cent up on the 2023 average.
However, the 2023 figure was the lowest since 2019.
The Central Bank noted that while smaller injury claims had reduced in recent years, this has been offset by an increase in the average cost of larger injury claims.
Several commentators noted that the impact of the introduction of personal injury guidelines in 2021, which replaced the book of quantum, can be seen in the reduction in average injury compensation costs. This is particularly the case in relation to minor injury claims.
However, these reductions have been offset by the increase in litigation costs.
“Notwithstanding the increasing cost of vehicle repairs, injury claims account for more than half of the overall cost of settling motor claims, and we urgently need to see more claims settling at the Injuries Resolution Board,” said Ivan Cooper, board member of the Alliance for Insurance Reform.
While the litigation channel accounts for one-third of claims settled, it accounts for more than two-thirds of the cost of settling all claims, Mr Cooper said.
The Central Bank’s report noted that for injury claims settling directly or through the Injuries Resolution Board, “virtually all claims settled under the guidelines in 2024″.
Insurance Ireland said while premiums continue to be impacted by damage-cost inflation, the regulator’s report showed that the current average premium cost of €623 is below the previous high point of €738 in 2017, “demonstrating the impact of the Government’s reform agenda”.
“However, the trend of significantly increased damage claims costs continues, while the use of litigation to settle personal injury claims continues to erode the impact of reforms,” it added.
