Insurance industry urged to cut costs as claims fall 

Insurance industry urged to cut costs as claims fall 

'Claims costs are reducing significantly due to lower volumes and lower values and this new environment is ripe for premium reductions.' File picture

The insurance industry is facing fresh calls to make “significant” cuts to premiums after new figures revealed a dramatic reduction in both the cost of claims and the number of cases.

The Personal Injuries Assessment Board (PIAB) said complainants rejecting their awards and deciding, along with their legal teams, to go to the courts was resulting in “huge legal costs and delays”.

Publishing its 2020 annual report, the PIAB said:

  • The number of claims was down by 16%, from around 31,000 in 2019 to 26,000 in 2020, but this was mainly linked to the pandemic;
  • Total cost of awards was down 25%, from €275m to €206m, 

The PIAB said the reductions have increased since the introduction of new personal injury guidelines last April, with preliminary figures indicating a 50% fall in average awards.

“Claims costs are reducing significantly due to lower volumes and lower values and this new environment is ripe for premium reductions,” said PIAB chief executive Rosalind Carroll.

The annual report shows acceptance rates of the awards has fallen, from 58% in 2019 to 51% in 2020, despite what they say are similar awards in the PIAB as in the courts.

Ms Carroll said: “Though just 2% of claims ever make it through the courts and though average awards by PIAB and through litigation are broadly similar, awards are being needlessly rejected resulting in huge legal costs and delays.” 

She added: “The new personal injury guidelines should ultimately improve acceptance rates but solicitors and insurers also have a key role to play by accepting awards that will not materially change in value through costly litigation.” 

Minister of State at the Department of Enterprise, Robert Troy, said he is examining legislative proposals to strengthen and enhance the role of PIAB.

Peter Boland of the Alliance for Insurance Reform, said the massive drop in claim costs was “not being passed on” to policyholders but was “increasing insurer profits”.

He called on the State, through its recently established Insurance Competition Office, to get additional insurers into the market “as a matter of urgency”.

Industry body Insurance Ireland said it was “at one” with reform of the claims regime.

It said pricing is “a matter for individual companies” and competition law prevented them from commenting on future pricing.

It said motor insurance premiums have reduced over the last year and was “optimistic” the trend would continue with the Government’s reform plan.

The Law Society said high premiums were not driven by claims costs but insurance industry profits.

The society said: “Solicitors will, as ever, advise their clients professionally in every individual case. Each case is taken on its merits and it is incumbent upon all solicitors to advise their client to accept an award from the PIAB if they feel a better result cannot be achieved in court.

“However, generalising about the consequences of injuries is inappropriate. Each case turns on its own facts and, of course, each client is free to accept or disregard the advice of their solicitor.”

Supermacs boss Pat McDonagh said insurance costs remain "stubbornly high" and said the Government had "long fingered" reform of the PIAB.

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