An annual report on the motor-insurance sector, published by the Central Bank, shows that the average premium fell by 7% during 2020.

The report uses figures from the National Claims Information Database (NCID), which compiles aggregate data received from insurers.

Mark Cassidy (director of economics and statistics at the Central Bank) said that a trend of decreasing premiums that had been evident since 2018 continued last year.

The bank said that the fall in premiums was partly due to COVID-19, with insurers handing back rebates of €42.5 million – or 3% of total premiums earned – during the year. 

‘Uniqueness’ of 2020

The report shows that average premiums fell by 11% between 2018 and 2020, following a 62% jump between 2013 and 2018.

The impact of the pandemic was also seen in the cost of claims, with the average per policy falling by 20% during 2020.

There was a 26% drop in the frequency of claims during the year, but the average cost of those claims increased by 9%.

The average cost of an injury claims jumped by 18% to just over €51,000 last year – a rise that the Central Bank attributes to the “uniqueness of the 2020 accident year” because of COVID-19.

“Larger injury claims made up a higher proportion of all injury claims in 2020 than in previous years,” it says.

The cost of claims, as a percentage of total premiums, hit a record low of 50% last year.

Profits boosted

The report shows that the impact of COVID-19 appeared to boost insurers’ profits, which came in at €163 million – or 12% of their total income – in 2020. This compares with a figure of 9% between 2017 and 2020, and a period of operating losses between 2013 and 2016.  

Insurers’ income from investments was 3% of total income between 2017 and 2020, continuing a long-term downward trend from 2009.

The figures show that just over a third of injury claims were settled through litigation, but before a court award, with only 2% determined by a court award.

These cases, however, accounted for more than two-thirds of the cost of settling claims, compared with just over 20% for claims that were settled directly and 10% for those settled through the Personal Injuries Assessment Board (PIAB).

Longer wait for litigants

Claims settled through the PIAB accounted for 15% of the total, with 36% settled directly before any engagement with the board, and 13% were settled directly after the PIAB became involved.

The report shows that the average wait for claimants who settled through litigation was 3.9 years, for the period between 2015 and 2020. The equivalent period for PIAB-settled claims was two years, with 1.3 years for those that were settled directly.

The figures show that the average pay-out for those who took the litigation route was €23,000, only slightly higher than the €22,000 for those using PIAB. Average legal costs for the former, however, came to €15,000, compared with €700 for the latter.

Cassidy described the new personal Injuries Guidelines from the Judicial Council as a significant development, adding that future reports would look to assess their impact on claims.