Despite premium rises on business-related insurance, insurers see 25% drop in profit

Profit driven by an increase in claims, report shows

Claims taken through the Injuries Resolution Board were settled for on average €27,538, with legal costs amounting to €709.

Despite an increase in premiums, insurance companies which offer employers’ liability (EL), public liability (PL), and commercial property insurance have seen their profits fall by more than 25% during 2024, driven by an increase in claims during the year, a new report by the Central Bank of Ireland shows.

However, the Alliance for Insurance Reform said there was a “deep disconnect” between falling claims, strong insurer profits, and stubbornly rising premiums.

According to the report, during 2024, the average premium for a package policy, which includes EL, PL, and commercial property insurance, stood at €3,043 —  a 4% increase year-on-year and a 23% increase compared to 2020.

The majority of EL, PL, commercial property policies, 87%, were taken out as part of a package. More than half of these, 57%, had premiums which cost less than €1,000 while 90% had a premium of €5,000 or less. These percentages vary across different sectors.

Standalone policies made up 13% of all policies, with most of these being PL or commercial property policies.

The average earned premium for commercial property cover was €1,491 in 2024, which was higher than both EL and PL cover, which had an average of €1,080 and €950 respectively.

In 2024, insurers in these sectors earned €1.36bn in gross premiums across roughly 334,000 policies. As this includes package policies, if each policy category was split into its components, there would be roughly 800,000 policies active in the market last year.

In 2023, insurers generated €1.3bn in gross premiums from about 330,000 policies.

Total claims costs for the 2024 accident year are expected to be €608m across 30,593 claims. While the total number of claims fell compared to 2023, when 31,261 were recorded, the ultimate cost of these claims increased from €595m.

The average expected cost of EL and PL claims increased by 6%, and 7% respectively compared to 2023. The average expected cost of commercial property claims remained stable in 2024.

“The increase in ultimate claims costs in recent years may be influenced by the high inflationary environment over that period. Ultimate claim numbers have decreased in 2024, although they remained higher than the expected number of claims in 2021 and 2022,” the report said.

In terms of how claims are settled in EL/PL cases, the average compensation for direct settlements stood at €20,800 in 2024, with average legal costs hitting €3,836. Claims taken through the Injuries Resolution Board were settled for on average €27,538, with legal costs amounting to €709.

However, if the claim has gone to litigation, the average compensation increases to €43,361, with legal costs hitting €33,550. For claims under €150,000, this drops to just under €26,000 and just over €25,000 respectively.

Litigated settlements made up 71% of claimants in 2024.

The report found overall gross underwriting claims increased from €812m in 2023 to €964m in 2024, however, the sector incurred less expenditure from reinsurance, down €50m to €211m.

This resulted in the insurance companies recording an after-tax profit of €137m in 2024, down from the €183m recorded the year prior.

Member of the Alliance for Insurance Reform and owner of Kidspace play centres in Dublin Tracy Sheridan said the data showed claims were “down in recent years, insurer profits are up, and premiums keep rising”.

“Businesses, community groups and voluntary organisations are being told that premiums reflect costs, yet insurers appear to be the only ones benefiting from the cost reductions.” 

Industry group Insurance Ireland said although profits were down, the industry remained “modestly profitable”, which it said was “essential to ensure Ireland remains a market that is competitive and offers choice for consumers and businesses”.