The Central Bank’s second private motor insurance report of the National Claims Information Database (NCID) shows that, between 2009 and 2019, the average cost of a claim rose 65% while the frequency of claims fell 45%.
The data shows that the cost of claims per policy fell 9% while the average earned premium per policy rose 35%.
Claims costs were 72% of earned premium between 2009 and 2019, and while 2009 had a loss ratio of 88%; 2019 had a loss ratio of 59%.
More specifically, between 2018 and 2019, the average cost of a claim rose 4% and the frequency of claims fell 5%.
The cost of claims per policy fell 1% while average earned premium per policy fell 4%.
And 2018 had a loss ratio of 57% while 2019 had a loss ratio of 59%.
Profit at 10% of income
Profit in the sector was 10% of income in 2019 while it was 9% of income in 2018.
In terms of injury claimant settlements between 2015 and 2019:
A full 50% of injury claimants settled directly, 17% settled through PIAB and 33% settled through litigation,
22% of injury costs settled directly, 12% settled through PIAB and 67% settled through litigation,
Average compensation for a direct settlement was €13,427 and average legal costs were €1,397,
Average compensation for a PIAB settlement was €23,137 and average legal costs were €716,
Average compensation for a litigated settlement was €46,214 and average legal costs were €23,409.
Of the claimants who settled injury claims through litigation during 2015 to 2019, 85% settled for less than €100K.
For these claimants, the average compensation was €23,572 and average legal costs were €14,949.
The new data collected for this report shows us that for claimants who settled injury claims in 2019:
39% settled before PIAB,
13% settled directly, after PIAB,
14% settled through PIAB,
31% settled through litigation, before a court award,
2% settled through litigation, with a court award.
The report is part of a push to improve the overall transparency of the private motor claims environment.
The report will inform policymaking by analysing:
Cost of claims,
Cost of premiums,
How claims are settled,
Variance in and components of settlement costs.
The NCID houses aggregate data collected from all insurers selling private motor insurance, including premium and claims data.
Director of economics and statistics, Mark Cassidy, said this morning: “The insurance industry plays a critical role in the Irish financial services industry and for the economy and its citizens.
“The new data that we are releasing today will improve transparency in the Irish motor insurance market, particularly with regard to claims costs, settlement channels and premiums paid by customers.
“The report has been extended this year to provide further information on settlement channels, premium trends and information on claim development patterns, which are important enhancements that can assist market participants in their understanding of claims costs.”
The Cost of Insurance Working Group was established in 2016 to examine the factors contributing to the increasing cost of insurance and to identify measures to reduce this cost, taking account of the requirement to maintain a financially stable insurance sector.
The focus of the first phase of its work was on the rising costs of motor insurance, which culminated in the publication of the Cost of Motor Insurance Working Group: Report on the Cost of Motor Insurance in January 2017.
Recommendation 11 in this report required the Central Bank of Ireland to establish a National Claims Information Database (NCID), to improve data availability.
The Central Bank will commence data collection to publish the first Employer Liability (EL) and Public Liability (PL) NCID report in early 2021.
Liability insurance consists of a broad range of business sectors covering a variety of risks and this increases the complexity of data collection, the regulator says