New Central Bank report shows personal injuries now account for 75% of all motor claims costs - up from 59% in 2009
- In 2018 injury claims accounted for 8% of claim numbers but 75% of claims costs
- Report shows 64% increase in average cost per claim from 2009-2018
- Falling claims cost per policy over 10 years was driven by falling frequency not reducing costs (Cost of an injury and damage claim up by 64%)
- Irish motor market was loss making for several years
- In litigated cases below €100k legal costs are 63% of compensation
Issued 16 December 2019. The 10 years of motor claims data published today shows personal injury and damage inflation is the main challenge for the sector and must be addressed through the Judicial Council.
Gerry Hassett, Interim CEO of Insurance Ireland said, “The data in this report highlights the importance of the cost of claims to the market as it is the largest cost paid by insurers. Insurers have seen a 64% increase in average cost of a claim from 2009-2018 with the lion’s share of this inflation coming from 2013 onwards.”
“The 10 years of data shows falling costs for motorists up to 2013 but the industry became loss making and this peaked in 2014. The industry was loss making at this time and was impacted by increasing injury and damage claims costs, lower interest rate returns and the disruptive effects of failures like Setanta Insurance. As these trends increased from 2013 onwards, insurers had to provision for the inflation in injury and damage claims evident in the market and settlement times for claims of up to four and a half years”.
“The experience of the market in recent years has been defined by volatility and uncertainty. Injury cost inflation remains a major challenge and this is also impacting on the Employers’ Liability and Public Liability markets”.
“The findings of the National Claims Information Database are clear: claims costs are the key cost in the motor insurance market. The policy focus on reforming our personal injury award levels is critically important to address these costs. In addition, the legal fees of 63% of compensation in litigated cases under €100k is a significant concern and underlines the need for these costs to be tackled”.
Gerry concluded, “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. New guidelines for compensation awards are urgently needed in 2020 to address these costs”.
Notes for editors:
- 2009-2013 claims costs reduced by 14% and premiums reduced by 13%
- 2013-2018 claims costs increased by 14% and premiums increased by 62%
- The average cost of settling injury claims increased by 18% between 2015 and 2018 (across all channels)
- In litigated cases capped at €100k legal costs are 63% of compensation
- 2009-2018 claims frequency reduced by 40%; injury claims frequency reduced by 20%; damage claims frequency reduced by 43%
- In 2018 injury claims accounted for 8% of claim numbers but 75% of claims costs. Damage claims accounted for 92% of claims numbers and 25% of claims costs.
- Increase in overall claims costs of 14% from 2013 – 2018.
- Average 4.2 years for claims to be fully paid in litigated settlements below €100k