MOTOR INSURANCE PREMIUMS were largely unchanged in the first half of 2023 despite soaring claims costs.
There was a 0.5% increase to €561 in the first half of 2023 when compared to the year previous, and there has been a decreasing trend since the second half of 2017 when the average premium was €730.
This is against an increase of close to 20% in settled claim costs across the industry to €358 million in the first half of 2023, when compared to the 2015-2019 half year average.
Over the same period, there’s been a 21% decrease in injury claim costs but a 126% increase in damage claim costs.
However, in the first half of 2023, damage claims took 0.4 years to settle, compared to 3.2 years for injuries.
This means it will take longer for trends in injury claims settlements to emerge when compared to damage claims.
The report also highlights the impact of the personal injury guidelines introduced in 2021 on claims settled through the Injuries Resolution Board (IRB), formerly known as the Personal Injuries Assessment Board.
Throughout 2015-2019, the average compensation paid to a claimant for claims less than €100,000 stood at €22,026, but in the first half of 2023, this dropped to €16,361.
The average compensation when going the litigation route for claims less than €100,000 was €24,037 over the period from 2015-2019, but this dropped to €20,453 in the first half of 2023.
However, the legal costs associated with both are starkly different.
The legal costs associated with the IRB route is €564, compared to €17,837 for the litigation route.
The Alliance for Insurance Reform said this shows that “the only ones that benefit from settling though the litigation channel are the legal profession”.
While Brian Hanley, chief executive of the Alliance for Insurance Reform, noted that some cases dealt with through litigation may be “contentious” and require “additional expertise”, he added that “it’s highly unlikely a majority of them fell within this bracket”.
There is also a significant time gap in settling claims – the average time taken to settle claims through the IRB was 2.7 years, compared to 5.2 years for claims settling through litigation.
Hanley said claims process through the “injuries assessment board rather than litigation is quicker, more efficient, and ultimately the awards are on average coming out just about the same”.
He added that competition in the insurance market is resulting in the slight increase in motor insurance when compared to rising damage claims.
Hanley also noted that rising damage claims are partly “due to inflation in terms of the cost of labour and the cost of repairs”.
Meanwhile, Insurance Ireland said the “sharp increase in damage claim costs and the continued pattern of claims going the litigated route” is a “worrying trend”.
Insurance Ireland CEO Moyagh Murdock said “successive reports have shown that the litigated channels still account for the vast majority of claims costs”.
She said this is “despite the fact that litigation is slower and doesn’t actually deliver better outcomes for claimants, with most of the additional cost going to legal fees”.
She added that this “highlights that the strengthened role of the Injuries Resolution Board to increase settlements through mediation and without unnecessary litigation is critically important”.
If you would like an assessment of a claim, you can use the online form available here without obligation or alternatively you can use the automatic claim calculator.
