Costs to settle car insurance claims hits record

Total claims costs were 20% higher when compared to the average between 2015 and 2019. While damage claims were up significantly compared to this average, injury costs claims were down 21%.

The bank did not compare the data to the years between 2020 to 2022 due to a lower level of activity resulting from the pandemic. The report said it is important to note that damage claims are settled much faster than injury claims, 0.4 years compared to 3.2 years on average.

Gross premiums across the private motor insurance market during the first half of 2023 totalled €614m across 1.1 million policies.

The average written premium — the amount of money the policy-holder has to pay — stood at €561 during this period representing an increase of 1% compared to the end of 2022 but a 24% decrease compared to the peak in 2017.

The Central Bank also published a report into the employer’s liability and public liability insurance markets.

The total cost of settled claims during the first half of 2023 for these two insurance categories reached €152m which is the highest it has been since the start of 2020.

The majority of damage claims arise from public liability policies which have a mix of bodily injury and damage claims. Claims within employer’s liability policies are predominantly injury claims.

In total, there were 3,700 claims settled between January and June last year. Of the total cost, 91% were for claims that went through litigation.

Impact of Personal Injuries Guidelines

The report said the increasing trend in the proportion of litigated claims costs likely reflects the impact of the Personal Injuries Guidelines which were introduced in April 2021.

It said these changes have reduced average claims costs in the direct and Personal Injuries Resolution Board (PIRB) settlement channels, but which have not yet had a measurable impact on claims in the litigated channels.

The average total cost of settling a claim directly has fallen from €24,000 in 2022 to €19,999 during the first six months of 2023. The total cost of claims settled through PIRB fell slightly from €26,150 to €26,031.

However, the costs associated with litigated claims continued to increase. In 2022, the average cost stood at €82,364 which increased to €87,161 last year.

“Legal costs are most significant for claims settled through litigation and have shown an upward trend in recent years reaching 40% of total in the first half of 2023,” the report said.

“This compares with the direct channel where legal costs were 17% of total cost and PIAB where legal costs were 3% of total costs.”