27% fall in motor insurance premiums over the last 5 years
- According to Central Bank’s NCID data for 2021, motor premiums have fallen by 17% in the 4 years from Q4 2017 to Q4 2021.
- When combined with CSO data, which shows a 10% reduction in the year to Q4 2022, there has been a reduction of 27% in the last 5 years.
- Concerning to see a reduction in the proportion of claimants using the PIAB system in tandem with spiralling legal costs in spite of the introduction of the Personal Injuries Guidelines during 2021.
- Average profitability of 4% over the last 13 years which includes operating profits and losses. Figures show cyclical nature of the market fluctuating between periods of profit and loss.
15 November 2022. Insurance Ireland today welcomed the latest NCID report, which shows a 17% fall in motor insurance premiums between Q4 2017 and Q4 2021.
Based on the combined NCID and CSO data, there has been a reduction of 27% from the end of 2017 to October 2022. The recent CSO data shows a further 10% reduction in motor premiums from December 2021 to October 2022. Insurance Ireland has consistently supported the insurance reform measures introduced by Government. While the frequency of claims increased year on year as the country started emerging from Covid-19, we continue to see a lower cost of claims, which has been benefitting consumers.
Moyagh Murdock, Chief Executive of Insurance Ireland said “The cost of insurance is a key concern for consumers, so it is positive to see motor premiums falling for a fifth consecutive year. We have consistently called for the introduction of reforms by Government that would reduce market volatility and bring more consistency for policyholders. The falling premiums in this Report provide clear evidence that the reforms are starting to work and consumers are benefitting while they are seeing rising costs in many other areas of the economy.
“Ultimately, reduced costs bring reduced premiums, and Insurance Ireland members remain committed to continue passing on the benefits of lower costs of claims to customers. This is evidenced by the most recent CSO figures for October 2022, which demonstrate a further reduction in premiums of 10% in the last year, achieved against a backdrop of rising inflation.
“It is concerning to see a decline in the proportion of claimants using PIAB to 15% accounting for only 8% of total injury claims costs. This is in spite of the introduction of the Personal Injuries Guidelines during 2021.
“35% of claimants went the legal route with legal fees in the litigated channel accounting for 40% of total settled claims costs in 2021. 15% chose the PIAB route where legal fees accounted for 4% of total settled claims costs in this channel. Overall, litigated cases accounted for 72% of settled claims costs (up from 67% in 2020) while PIAB made up only 8% of settled claims costs (down from 10% in 2020).
“Claimants received roughly the same level of award whether opting for litigation or PIAB. This trend is negating some of the benefits as a result of the other measures implemented as part of the Government’s Action Plan for Insurance Reform.
“While the latest data from PIAB, published earlier this month, shows a more positive trend emerging in 2022 in terms of claimants accepting PIAB awards, the proportion of cases going through litigation remains far too high.
“It is well publicised that the cost of legal fees feeds into the cost of insurance significantly, so this issue needs to be prioritised in order to swing the pendulum back in favour of consumers and the economy.
“Against this backdrop, it is essential that the remaining measures in the Government’s Action Plan for Insurance Reform are completed. These measures include the strengthening of PIAB through the passage of the Personal Injuries Resolution Board Bill 2022, the rebalancing of the duty of care, and increased competition in the market.
“While the decline in the PIAB settlement figures in today’s report and the increase in litigated cases are disappointing, Insurance Ireland remains optimistic for the future of insurance in this country. Although competition law prevents us from commenting on future pricing in the market, we know that the last time Ireland got to grips with costs with the establishment of PIAB, insurers responded positively and consumers benefitted,” said Moyagh Murdock.