Motor insurers here saw their combined operating profits increase to a record level for the fifth straight year in a row last year, as lower levels of activity on the roads due to the pandemic led to fewer claims.
Operating profits in 2021 climbed to €176m, up €5m on the previous year, new data from the Central Bank shows.
But the fourth Private Motor Insurance Report of the National Claims Information Database also details how during the same period average motor insurance premiums per policy fell just 2% to €607.
This is despite the average cost of a claim falling by 9% over the same period.
However, the claims cost per policy rose by 1% during the year and the frequency of claims rose by 11%.
“While claims cost per policy and the frequency of claims both increased from 2020 to 2021, overall, these metrics have decreased considerably from pre-pandemic levels,” said Robert Kelly, Acting Director of Economics and Statistics at the Central Bank.
Overall, the Central Bank finds the average earned premium last year was down 17% from its peak in the last three months of 2017.
But compared to 2009, the average earned premium in 2021 was still 23% higher.
Insurance Ireland said that when combined with CSO data, which shows motor insurance premiums fell 10% over the first nine months of this year, it means there has been a reduction of 27% in the last five years.
“The cost of insurance is a key concern for consumers, so it is positive to see motor premiums falling for a fifth consecutive year,” said Moyagh Murdock, chief executive of Insurance Ireland.
“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.”
She added that insurers remain committed to passing the savings derived from reforms on to customers.
“I have been clear with the insurance industry that the Government expects all cost savings made as a result of the Government’s insurance reforms be passed on to consumers – the NCID will allow us to monitor this going forward,” said Minister of State at the Department of Finance, Seán Fleming.
The data takes in part of the impact of the new personal injury guidelines, which came into effect in April of last year after being accepted by the Judicial Council.
It shows that 16% of claimants settled under the new guidelines in 2021.
Among all those that used the Personal Injuries Assessment Board (PIAB) across the whole of last year to resolve their claims, 20% settled under the guidelines.
The average compensation paid out was 34% lower than it was for claims that were settled using the old Book of Quantum that replaced the guidelines.
However, the regulator says that given the small proportion of claims that settled under the guidelines last year, there are limitations to the insight that can be derived from the data.
“Future reports, including mid-year reports which will commence in 2023, will over time provide a more complete picture of the impact of the Guidelines across all settlement channels,” said Mr Kelly.
The report finds just over a third of those with injury claims last year settled directly with an insurer, before going to PIAB.
14% settled directly with an insurer after going to PIAB and 16% settled through PIAB.
Just over a third settled through a litigation process, but before the court made an award.
However, this made up 66% of the total costs of motor insurance last year.
A mere 2% settled as a part of a court award.
Litigation was the slowest route, taking 3.9 years on average, with the PIAB process taking two years and a direct settlement requiring 1.4 years.
Insurance Ireland said it was concerning to see a decline in the proportion of claimants using PIAB, in spite of the introduction of the Personal Injuries Guidelines during 2021.
“Claimants received roughly the same level of award whether opting for litigation or PIAB,” Ms Murdock said.
“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.”
Minister Fleming said the data shows that PIAB settlements are faster, have substantially lower legal costs and similar award levels, as to those claims settled by litigation.
“This is why the Government is prioritising the Personal Injuries Resolution Board Bill 2022 in the Oireachtas, which is a principal action under our Action Plan for Insurance Reform,” he said.