Insurance firms criticised for 'derisory' Covid rebates as claims plummet 

Both Insurance Ireland and the Alliance for Insurance Reform called for greater use of the Personal Injuries Assessment Board (PIAB) so that fewer claim cases go to court.

The cost of motor insurance premiums fell by 7% last year while the cost of claims per policy fell much further, dropping 20% due to the impact of the Covid-19 pandemic that saw traffic on the roads plummet.

A report from the Central Bank found that the fall in premiums last year was influenced, in part, by rebates issued by insurers of €42.5m which equates to 3% of private motor insurance premiums.

Along with the drop in claim costs last year, there was also a significant drop of 26% in the frequency of claims with the average cost per claim rising by 9%. The figures show that the cost of claims as a percentage of premiums reached a record low of 50% last year. This compares to a high of 92% in 2014.

The publication of the new figures has led to insurance companies being accused of failing to pass on the savings they are making with the rebates issued last year described as "derisory".

Insurers' operating profit for 2020 amounted to 12% of total income, four times the average profit made over the past decade. The Alliance for Insurance Reform said the analysis shows it was "business as usual" for lawyers, insurers and brokers during the pandemic.

Peter Boland, director of the Alliance said:

This report illustrates just how much money is being made by underwriters, brokers and lawyers at the expense of Irish charities, community and voluntary groups, sport and cultural organisations and SMEs struggling to make ends meet.

“The collapse in economic and social activity in 2020 was met with a derisory average rebate of 3% with many insurers giving no rebate at all," he said.

However, Moyagh Murdock, Chief Executive of the insurance representative body Insurance Ireland said their members were committed to passing on the lower costs of claims to customers pointing to an overall 24% reduction in premiums since 2017.

"In addition to a reduction in premiums, it’s important to note that the members of Insurance Ireland have returned in excess of €56m in rebates to both private and commercial motor customers. The industry is paying out in excess of €430m in business interruption claims throughout the pandemic as well as providing many forbearance measures such as premium holidays and suspensions and step back measures.”

Both Insurance Ireland and the Alliance for Insurance Reform called for greater use of the Personal Injuries Assessment Board (PIAB) so that fewer claim cases go to court.