Motorists 'still being ripped off' by excessive insurance costs

Motorists 'still being ripped off' by excessive insurance costs

The average cost per policy was €676 in 2019 which is still considerably above the average low of €431 at the end of 2013.

Motorists are still being "ripped off" on insurance premiums with a new report showing consumers paid out 50% more on average to cover themselves on the road than they did in 2013. 

The second Motor Insurance Report of the National Claims Information Database, published by the Central Bank, shows premiums fell 4% between 2018 and the end of last year, having soared by 63% between 2013 and 2018.

Yet while the average number of claims continues to fall, the average cost per claim, whether injury or damage, continues to rise.

The recent modest reduction in premiums has not satisfied the Alliance for Insurance Reform, which said urgent action was now needed to rein in the cost to motorists, who were still being "ripped off".

The alliance's director, Peter Boland, said the report "lays bare the scale of the greed that has driven the current insurance crisis, enriching insurance companies, brokers and lawyers at the expense of Irish motorists struggling to make ends meet".

Peter Boland, director of the Alliance for Insurance Reform, says the National Claims Information Database's new report "lays bare the scale of greed that has driven the current insurance crisis". 
Peter Boland, director of the Alliance for Insurance Reform, says the National Claims Information Database's new report "lays bare the scale of greed that has driven the current insurance crisis". 

"Nothing much has changed since the first National Claims Information Database report was published this time last year and nothing the Government has done so far has applied downward pressure to premiums," he said.

“There is a clear case from this data for immediate reductions in motor insurance premiums to sustainable levels and an urgent acceleration in the real reform programme promised by the Cabinet Committee Sub-Group on insurance reform," he said.

The average cost per policy was €676 in 2019, down from the average high of €714 in the second quarter of 2018 but still considerably above the average low of €431 at the end of 2013.

The report also shows that while the cost per claim increased 65% from 2009 to 2019, over the same period the frequency of claims fell by 45%, decreasing by 5% between 2018 and 2019.

Half of claimants settled directly, with a third going through litigation and just 17% going through the Personal Injuries Assessment Board. 

As to the method of settlement, just 12% were finalised through the Personal Injuries Assessment Board, with 22% settled directly, and two-thirds going through litigation.

Those differing channels also reflect different outcomes: The average compensation paid out in direct settlement was €13,427 against average legal costs of €1,397, while the average compensation arrived at via the Personal Injuries Assessment Board, was €23,137, with average legal costs of €716. 

However, the biggest awards were from those cases that went to court. 

Litigated settlements resulted in average compensation of €46,214, with sizeable average legal costs of €23,409.

Insurance Ireland CEO Moyagh Murdock said premiums would fall if the Personal Injuries Assessment Board dealt with more cases, adding that in some cases claimants appeared to "tick the box" with the board before then moving onto litigation. She also said claim awards were still "unsustainably high" here compared to other jurisdictions and that insurers were awaiting a judicial review of the quantum of awards.

Insurance Ireland CEO Moyagh Murdock said that premiums would fall if the Personal Injuries Assessment Board dealt with more cases.
Insurance Ireland CEO Moyagh Murdock said that premiums would fall if the Personal Injuries Assessment Board dealt with more cases.

The National Claims Information Database report does not mention bogus claims, but Ms Murdock said insurers were aware of some "questionable" or "exaggerated" claims, all of which needed to be defended at some cost. She said gardaí needed to be resourced alongside "stronger powers of adjudication" so those cases never make it to court.

"The insurance industry was calling for a dedicated, centralised insurance fraud section to be set up, that needs further review to see if that was to be done by the Garda Commissioner, how that could be done and funded independently of the insurers," she said.  

"I absolutely think there would be merit in that. 

"We do not seek to overstate fraud as an issue in the rising cost of motor claims. The high level of personal injury awards and legal costs are much more significant issues."

Ms Murdock said premiums have fallen again this year, but that reforms were needed, including that the Personal Injuries Assessment Board, be "refreshed", for there to be a continued downward trend.

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