Fears of further motor premium increases after record rise in damages claims

A surge in the number and cost of insurance claims for damage to vehicles had already started driving up the cost of motor cover in the first half of last year. That is according to the latest figures from the Central Bank.

More recent figures from the Central Statistics Office show that motor insurance costs were up for the ninth month in a row in May.

This is reversing the trend of falling motor premium rates since the second half of 2020.

A new Central Bank report indicates that the cost of the average motor premium rose to €561 in the first half of last year on the back of a higher number of claims for damage to cars.

This is up from €554 in the second half of last year.

Motor policyholders have yet to benefit from the slashing of the guidelines for the level of payouts for injury claims.

This is because it takes so long for litigated claims to work their way through the courts.

However, the Central Bank report says that for claims that go through the courts legal costs make up almost half the total cost of the claim.

There were 73,400 claims settled by motor insurers, at a cost of €358m, in the six months half of last year.

This is up 61,600 claims settled in the second half of 2022, at a cost of €270m, according to a report from the Central Bank entitled ‘National Claims Information Database: Private Motor Insurance Mid-Year 2023 Data Release’.

The first six months of last year had the highest claims costs for motor cover of any half year since the Central Bank started gathering data on claims and premiums, up 20pc the 2015 to 2019 pre-Covid average.

For litigated motor claims that settled for less than €100,000 in first half 2023, legal costs made up 46pc of the total claim cost on average, the Central Bank said.

Industry lobby group Insurance Ireland acknowledged that premiums rose slightly.

But it said the level of inflation in the wider economy was much higher and insisted premiums have decreased by more than 20pc since 2017.

It said this shows that the Government’s insurance reform agenda is working and insurers are delivering for consumers.

Chief executive of Insurance Ireland Moyagh Murdock said: “This is in contrast with the insurance market in the UK and Europe, with the Government’s reforms and the industry’s strong commitment to deliver for consumers having insulated the Irish insurance market against the steep increases in costs and premiums seen in neighbouring countries.”

But she said there are some worrying trends that could impact over time such as the concerning increase in road collisions, a contributing factor to the sharp increase in damage claim costs and the continued pattern of claims going the litigated route.