Motor insurance premiums fell by 5% in the first six months of last year, according to new data compiled by the Central Bank of Ireland.
The first mid-year motor insurance report of the National Claims Information Database also shows the cost of claims settled directly or through the Personal Injuries Assessment Board (PIAB) has fallen by between a third and half since the introduction of the new Personal Injury Guidelines by the judiciary two years ago.
However, the information also shows that while just over a third of injury claims were settled through litigation during the period, they still accounted for over three quarters of the total costs.
“We can see from today’s report that 43% of all injury claims settled under the Guidelines in the first half of 2022,” said Robert Kelly, Director of Economics and Statistics at the Central Bank.
“For claims settled directly and via PIAB in H1 2022, the average cost of claims was lower for those settled under the Guidelines, compared with those settled under the Book of Quantum.”
“There have not yet been enough litigated claims settled under the Guidelines to determine the impact on the average cost of a claim in this channel.”
According to the data, the average premium per policy was €578 in the first half of last year, 5% below the figure at the end of 2021.
The total number of settled claims during the six-month period came to 67,000, with 94% of these relating to damage and 6% to injuries.
The cost of settling these claims reached €278m, split 55% towards injury claims and 45% towards damage.
The data also shows that while the number and costs of damage claims rose, the number and cost of injury claims fell, with the effects offsetting each other.
When it comes to settlements during the first half of last year, nearly half happened through the direct channel, accounting for 15% of injury claim costs.
A further 13% went through PIAB, making up just 6% of claims costs, while 39% through litigation, making up around 79% of injury costs.
Litigation was the slowest channel, taking 4.8 years on average, followed by PIAB at 2.7 years and 1.8 years for those who settled directly.
Those who used litigation to settle their claim received average compensation of €22,473 but faced legal cost of €17,813.
However, those who went the PIAB route on average came away with €15,665 in compensation but paid legal costs of €1,156.
In relation the claims settled under the new personal injury guidelines, there was a 47% reduction in average claims costs when settled directly before PIAB, compared to what was received under claims based around the old Book of Quantum in 2020.
The Minister of State with special responsibility for Financial Services, Credit Unions and Insurance, claimed that overall, the data is evidence that Government actions to bring the cost of insurance down were working.
She said the analysis shows that on average motorists have received average savings of €135 per policy since motor insurance premiums peaked at €710 at the end of 2017.
“I am conscious that this price reduction benefitting private motor policyholders comes against the backdrop of the current global inflationary environment, which may impact in particular on damage repairs,” said Jennifer Carroll MacNeill.
“There has been a substantial reduction in the cost of personal injury claims and this must remain our focus.”
“I will continue to engage with all stakeholders in the insurance sector and work on the outstanding matters which most effect the cost of insurance for motorists, home owners and businesses.”
Insurance Ireland said the figures demonstrate that insurers have followed through on their commitment to pass on the benefits of the new Personal Injuries Guidelines to consumers.
“They have done so in anticipation of the full effect of the Guidelines feeding through the system,” said Chief Executive, Moyagh Murdock.
But she added that it is concerning to see that only 13% of claimants settled through PIAB, accounting for only 6% of injury claims costs.
“39% of claimants settled through litigation, making up 79% of total costs,” Ms Murdoch said.
“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.”
“It is 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.”
However, while the Alliance for Insurance Reform welcomed what it said was the clear impact of reform of the sector, it added that there is a gap between what the reforms are delivering and what insurers are passing on.
“A reduction of 5% in premiums compared to 2021 does not fully reflect the impact of the reforms, even when recent increases in damage claims inflation are factored in,” said Peter Boland, Director of the Alliance.
“From a policyholder perspective, it appears that many of the gains being delivered are being used to improve underwriter profitability and bankroll the takeover frenzy in the insurance broker sector.
“This is even more the case with liability insurance, where premiums are actually continuing to increase despite the reforms being delivered.”
“Government must hold insurers to account so that the gains from the Judicial Guidelines and other reforms are passed on in full.”