Significant rise in injury claims drives up cost of motor premiums

The price of motor insurance will rise again next year as both the number and the cost of injury claims continue to climb significantly.

The warning comes after the publication of a new Central Bank review which found that claims are taking longer to settle across both the motor and personal liability sector, resulting in larger numbers of claims sitting on insurers' books.

The widely anticipated increases in motor premiums next year will come on the back of price hikes of around 25 per cent this year.

Most motorists will end up paying around €300 per year more for a comprehensive policy in 2016 than in 2014.

The Central Bank review said the average cost of a private motor insurance claim climbed by 8 per cent over the two-year period of 2013 and 2014. The rise in cost per claim in the employer liability sector jumped by 27 per cent and 8 per cent in the public liability sector.

The frequency of private motor injury last year climbed by an average of 8.3 per cent.

Factors

Sylvia Cronin

, the director of insurance supervision at the Central Bank, said that the non-life insurance industry was facing a number of challenges from legislative changes and the economic environment.

"Increasing court awards, economic activity and increasing numbers of vehicles on the roads are some of the factors pushing up insurance claims," she said. Kevin Thompson, the chief executive of Insurance Ireland, an umbrella group for the sector, said the Central Bank had identified "a number of key drivers of claims costs".

These factors combined had resulted in a “very dynamic environment” for Irish motor insurance companies, Mr Thompson added.

He called for steps to be taken to address the increasing cost of motor claims.

Mr Thompson said there needed to be more enforcement of the rules of the road and for victims of crashes to be compensated “at reasonable levels which society can afford”.

Consensus

He also called for a reduction in legal costs “which are still too high and which have never been tackled in litigated cases”.

“It’s interesting that there appears to be considerable consensus between the insurers and the Central Bank on the increasing cost of claims, largely led by heightened personal injury payouts being awarded by the courts,” said the chief executive of the Irish Brokers’ Association, Ciaran Phelan.

He warned that motor insurance premiums “will continue to rise, as insurers attempt to match overall premiums to overall claims”.