Motor insurance premiums rose in 2015 despite the number of claims falling, according to a new report from the Central Bank.
According to the study, which is based on figures supplied by Insurance Ireland, average premiums for comprehensive cover increased by 9% from €459 in 2014 to €500 in 2015, while third party fire and theft cover increased by 19% from €557 in 2014 to €663 in 2015.
However, the claim frequency for comprehensive and third party fire and theft policies fell in 2015.
In fact, total claim frequency has trended downwards for both comprehensive and third party fire and theft cover since 2008.
The total claims include both vehicular damage claims and personal injury claims.
The average cost of year one claims for comprehensive policies increased by 10% from €5,264 in 2014 to €5,776 in 2015, while the average cost of year one claims for comprehensive policies increased by 45% since 2010 when an average cost of €3,993 was reported.
The average cost of year one claims for third party fire and theft cover increased by 11% from €7,845 in 2014 to €8,732 in 2015.
The report is the third report in recent days into insurance costs.
CEO of Insurance Ireland Kevin Thompson said all the reports highlighted the increased cost of claims in the motor insurance market.
“The defining issue in motor insurance is the rising cost of claims which is the level of awards and the costs associated with settling them,” he said. “These three reports show that the amount paid out in claims, in total amounts and average compensation, are increasing as well as the legal and other costs in the claims system.”
Mr Thompson said the total amount paid out in motor claims by Insurance Ireland members increased by 23% from 2011 to 2016 while in the same years, the amount paid out by the Personal Injuries Assessment Board across all classes of insurance increased by 50%.
“Given that it can take many years for a claim to be settled, there is a ‘long tail’ effect where any increase in awards and delay in settlement can lead to insurers having to revise upwards the cost of settling unsettled claims on their books,” said Mr Thompson.
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