A report has revealed the average motor insurance premium increased by 42% between 2009 and 2018, despite the cost of claims falling by 2.5% during the same period.
Newly released data also shows the private motor insurance industry is generating an operating profit of around 9% while the average level of profit in the UK is 5%.
The first study, carried out by the Central Bank, revealed the average cost of claims per policy decreased by 2.5% from €437 in 2009 to €426 in 2018.
Between 2009 and 2013, claims costs reduced by 14% to €375 followed by an increase of 14% to €426 in 2018.
Central Bank report damning indictment of insurance industry & Government, who pedalled their spin along with others. SF were right. Since 2009 motor premiums are UP 42%, claims are DOWN 40%. Industry at peak profits. End the spin, end the rip-off. Enough is enough #EndTheRipOff pic.twitter.com/tU6fXgRini— Pearse Doherty (@PearseDoherty) December 16, 2019
However, the average premium per policy increased by 42% from €498 in 2009 to €706 in 2018.
The statistics are based on data from the National Claims Information Database (NCID).
It was set up following a recommendation of the Government’s Cost of Insurance Working Group (CIWG).
It found that between 2009 and 2018, the number of claims reduced by 40%.
During this time, injury claims reduced by 20% and damage claims reduced by 43%.
The average cost of a claim increased by 64% during the same time period.
From 2015 to 2018, 53% of all injury claimants settled directly while 31% of injury claimants settled through litigation.
Injury claims settled through litigation had an average compensation cost of €45,390 while the average legal costs were €23,031 and claims took on average 4.4 years to settle.
Deputy Governor Sharon Donnery said the first report will bring transparency to the market.
She added: “Better data on insurance claims can inform the policy debates in Government, in the Oireachtas, in the firms and in wider society, as well as informing our own work in the Central Bank.”
The data also shows that more than half of all injury claims were settled directly while 31% of injury claims were settled through litigation.
Some 16% of claims were settled through the Personal Injuries Assessment Board (PIAB).
Directly settled injury claims had an average compensation of €11,674, while the average legal costs were €1,385 and claims took on average 1.7 years to settle.
Peter Boland, director of the Alliance for Insurance Reform, said the data lays bare the “scale of the greed” that has driven the insurance crisis.
He said that escalating insurance costs have been enriching firms and lawyers at the expense of Irish motorists.
Mr Boland added: “This situation has been enabled by a Government too slow to react to the crisis and too weak to take on the big vested interests in order to make a difference.
“Additionally, it is clear from the comprehensive NCID figures that motor insurance premiums have not reduced in recent months, contrary to the sample data published by the CSO and used extensively by Government to illustrate progress.
“Our members are furious and we demand immediate reductions in motor insurance premiums to sustainable levels, an urgent acceleration in the real reform programme from Government and an injection of decisiveness from key ministers (Justice Minister) Charlie Flanagan, (Finance Minister) Paschal Donohoe and An Taoiseach Leo Varadkar.”
Director general of the Law Society of Ireland Ken Murphy said the Central Bank has shone a statistical searchlight on what he described as the false and exaggerated claims of the Irish motor insurance industry.
He said: “Only one question remains: how will the insurance industry propaganda machine spin this?
“Today’s data vindicates what the Law Society has been highlighting for years. Neither claims costs nor legal fees could possibly account for, or justify, the massive increases in the premiums motorists have been compelled to pay by extremely profitable insurance companies.
“A constant feature of this debate is that Irish insurers appear to be very keen to compare average award levels for some forms of injury with their equivalent in the UK. Are they equally keen to compare their operating profit level of 9% in Ireland to the equivalent 5% across the Irish Sea?”
The average price paid for motor insurance shot up by 62% between 2013 and 2018.
The Central Bank's first-ever Private Motor Insurance Report also shows legal costs for most cases settled in court make up nearly two-thirds of the total compensation awarded.
The average premium in 2009 was €498. By 2013 it was €435.
But by last year premiums had increased by 62% to €706.
While the number of claims are down, the cost per claim is up 64%, meaning drivers paying much higher premiums.
Claims settled through the Personal Injuries Assessment Board had an average compensation of around €22,000 and legal fees of just €753.
While the majority of claims settled through litigation had similar compensation levels, legal fees were over €14,000.
The Central Bank says the more cases settled through PIAB, the greater the potential for lower premiums.
PIAB Chairperson Dermot Divilly today welcomed the Central Bank's report.
He said: "The report highlights the enormous costs involved in litigation as a mechanism of resolving personal injury claims, particularly when there are low cost alternatives.
"It is clear that the injured party receives a higher proportion of the total cost of settlement amount when a case is resolved through PIAB, as opposed to through litigation."