Insurance Ireland represents 95% of the domestic and international-based insurance sector in Ireland.
Yesterday it produced a report which cited the high cost of awards in court as one of the key factors driving up insurance premiums.
Other factors such as legal costs, fraud and the High Court’s recent judgment with Setanta Insurance were also blamed for the sharp increase.
“Motor claims costs are rising.
"The level of awards being made in the courts is at an all-time high. The average High Court award in 2014 was up 34% on 2013 and the average circuit court award was up 14% on 2013.
"In litigated cases, legal costs in Ireland account for more than 60% of the compensation awarded,” Insurance Ireland chief executive Kevin Thompson said.
“Motor injury awards made by the Injuries Board averaged €21,000 in 2014, a very high average considering that 80% of motor injury claims are for whiplash.
“The reality is that premiums are dictated by claims costs, and although the Irish market is very competitive, increases in the cost of claims will inevitably lead to increases in premiums,” he said.
Insurance claims and premiums on the rise https://t.co/gHBZYSTwz6— Morning Ireland (@morningireland) September 9, 2015
His comments were echoed by Irish Brokers Association chief executive, Ciaran Phelan who said the net result would likely mean more misery for customers.
“Without these issues being tackled, premiums are expected to continue to rise rapidly,” he added.
The head of the Injuries Board last week put the ball firmly in the insurance companies’ court to explain the rises, however, and revealed the number of personal injury claims litigated in court fell last year.
Interim chief executive Maurice Priestly said the near-25% rise in premiums was “at odds” with claim volumes and the cost of processing those claims.
“What we are seeing are insurance premia increases in the region of 20% and further clarity is needed on the precise cause of increases of this scale,” said Mr Priestly.
Mr Thompson yesterday hit back by highlighting what he referred to as flaws in the Injuries Board process which must be tackled to reduce non co-operation of claimants.
Claimants’ failure to co-operate, often at the behest of their solicitors, see about 40% of awards rejected in favour of the courts, he said. He also called for tougher sentences to be imposed as a fraud deterrent.
The Insurance Ireland chief claimed the High Court’s decision that the Motor Insurers’ Bureau of Ireland should be responsible for compensating customers of the defunct Setanta Insurance could force insurance companies out of the market and reduce competition.
“By April 2015, the cost of Setanta claims was approximately €90m and is likely to rise. Imposing the responsibility for this on the rest of the sector through the Motor Insurers’ Bureau of Ireland will result in higher premiums and potentially a risk of insurers exiting the Irish market,” he said.
Davy Stockbrokers analyst Emer Lang said it was difficult to determine the exact health of insurance companies operating here given that many are part of larger parent organisations.