Motor insurance premiums fall 5%, Central Bank figures suggest

The price of motor insurance has continued to fall with premiums costing 5 per cent less in the first half of 2022 compared with 2021 prices, according to a new report from the Central Bank of Ireland.

At €578, the average cost of a motor insurance policy is €135 less than it was in 2017, the report states.

The figures, contained in the first midyear report from the National Claims Information Database, have been welcomed by the Government and the insurance industry, although concern has been expressed at the volume of motor insurance cases continuing to go through the courts.

The total settled claims in the first six months of 2022 totalled about 67,000, with 6 per cent covering injury claims and 94 per cent representing claims for damages.

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The cost of settled claims was €278 million with 55 per cent relating to injury claim costs and 45 per cent to damages.

The report points to an increase in the number and cost of damages claims, and a decrease in the number and cost of injury claims.

Some 48 per cent of claimants settled directly, making up 15 per cent of total costs, with 13 per cent settled through the Personal Injuries Assessment Board (PIAB), a figure which represents 6 per cent of the total costs.

The PIAB was set up in 2004 to provide an alternative to the courts for settling compensation disputes without expensive litigation, the objective being to reduce insurance costs. While the numbers using the system are substantial, the court route is still taken by significant numbers.

According to the data, 39 per cent of claims were settled through litigation, with this cohort making up 79 per cent of the total costs in the first half of last year.

A new compensation system was introduced by the Government in early 2021 to contain spiralling costs. Under the new rules, the same award guidelines are used to determine both PIAB and court claims.

According to the report, 43 per cent of injury claims were settled under the new guidelines in the first half of last year with the remainder settled with reference to the Book of Quantum, which outlines a list of specific types of injury and an indication of the level of compensation that is likely to be awarded in respect of that particular injury.

The report also indicates that the share of motorists with comprehensive cover has increased to 90 per cent, up from about 80 per cent in 2018.

Insurance Ireland said the figures “demonstrate and reaffirm that insurers have followed through on their commitment to pass on the benefits of the new Personal Injuries Guidelines to consumers”.

The chief executive of the group, Moyagh Murdock, said the report showed “a notable increase in the number and cost of damage claims due to various inflationary pressures among other issues”.

She expressed concern that only 13 per cent of claimants settled through PIAB and noted that claimants “receive roughly the same level of award” whether opting for litigation or PIAB. This trend is negating some of the benefits implemented as part of the Government’s Action Plan for Insurance Reform.

Ms Murdock said it was “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 wider economy”.

The Minister for State for Financial Services, Jennifer Carroll MacNeill, said the fall in premium prices was proof the “actions of Government in tackling the cost of insurance continues to benefit consumers”.