Guidelines see big fall in motor insurance payouts

The average cost of injury claims settled under the guidelines was less than the average cost of claims settled under the Book of Quantum during 2020.

Revised personal injuries guidelines have resulted in a large drop in the cost of motor insurance settlements but injury claims still account for over half of all payouts, a new report by the Central Bank of Ireland shows.

According to the Central Bank’s mid-year Private Motor Insurance Report, in the first six months of 2022, there were 67,000 motor insurance claims made - of which 94% were for damage and just 6% for injuries.

The total cost to settle all these claims came to €278m - 55% of which related to injury claims and 45% related to damage claims.

The Central Bank said the first six months of 2022 saw two “offsetting effects” which were an increase in the cost of damage claims as well as a decrease in the number and cost of injury claims.

The decrease in the cost of injury claims was largely seen in the adoption of personal injuries guidelines in early March 2021 which came into effect in late April. Prior to this date, claims were assessed with reference to the Book of Quantum.

During the first half of 2022, 43% of injury claimants settled under the guidelines while 57% of claimants settled with reference to the Book of Quantum, which meant the level of compensation can defer depending on the particular injury.

According to the Central Bank, the average cost of injury claims settled under the guidelines was less than the average cost of claims settled under the Book of Quantum during 2020.

Claims settled under the guidelines, before engagement with the Personal Injuries Assessment Board (PIAB), saw a cost reduction of 47%. Costs also dropped 34% following settlement through PIAB and by 38% if settled directly after engagement with PIAB.

There wasn’t enough data to establish the reduction following litigation.

For injury claims settled directly, the average compensation was €10,489 with the average settlement through PIAB coming to €15,665. The average compensation following litigation was €22,473 but the average legal costs came to €17,813.

The report also shows that the average premium per policy has dropped by 5% to €578 compared to 2021.

Moyagh Murdock, chief executive of Insurance Ireland, said that the increase in damage claims were due to economic factors such as “various inflationary pressures among other issues”.

“Notwithstanding these pressures, which are being felt by consumers in sectors right across the economy, insurers have managed their costs to mitigate the knock-on effect to consumers,” she said.