The data shows that during the period 2009 to 2020, the annual average earned premium increased by 26%.
on an annual basis, average earned premia decreased by 7% from 2019 to 2020.
The decrease in 2020 was influenced to some extent by Covid-19 premium rebates. In respect of private motor insurance, insurers issued premium rebates of €42.5 million (equating to 3% of Gross Earned Premium in 2020).
The average claim cost per policy decreased by 20% from 2019 to 2020, reflecting the impact of Covid-19 and there was a significant drop of 26% in the frequency of claims (injury and damage combined) in 2020. However, the average cost per claim increased by 9% from 2019 to 2020.
The Central Bank motor insurance data shows that it’s “business as usual for lawyers, insurers and brokers during the pandemic” according to AIR and while the cost of claims per policy is down 29% over the last 12 years, premiums are up 26%. It shows too that insurers gave Covid-related rebates of just 3% as the economy and society shut down in 2020.
Director of the Alliance Peter Boland said, “This report illustrates just how much money is being made by underwriters, brokers and lawyers at the expense of Irish charities, community & voluntary groups, sport and cultural organisations and SMEs struggling to make ends meet.
“While this report repeats some of the analysis of the previous two reports, it’s far more comprehensive, covering as it does the period from 2009 to 2020. This gives us deeper insights and some startling data to explain the crisis policyholders find themselves in.
It shows, for example, that insurers are settling 86% of motor claims directly in value terms – only 10% are settled by the Personal Injuries Assessment Board and 4% by Court. Furthermore, third-party brokers’ commissions are high – and rising.
“Brand new analysis in this report shows that the average cost of personal injury claims rose 73% between 2009 and 2020 and this must be addressed through the new Judicial Guidelines,” said Peter Boland, “But the reality is that due to a sharp fall in the number of all motor insurance claims in the same period (down 59%), overall claims costs per policy dropped dramatically (down 29%). And yet, amazingly, the average earned premium increased by 26% in the same period.
“More recently, the collapse in economic and social activity in 2020 was met with a derisory average rebate of 3% with many insurers giving no rebate at all.
“It’s clear that the incumbent insurers have responded to developments in recent years in ways that suit themselves, not their customers.”
From a reform perspective the importance of insurers holding firm on the private settlements they make under the new Judicial Guidelines cannot be overstated, he added, “…otherwise the entire reform of personal injury guidelines will be fatally undermined before any such claims get to Court”.
Eoin McCambridge, Managing Director of McCambridge’s of Galway and director of the Alliance, said, “We’ve been well-aware for some time now that for the 94% of claimants who claim for more minor injuries it’s quicker and cheaper to settle via PIAB while achieving the same level of compensation. And yet the vast majority of these claims are going on to lengthy litigation. The only beneficiaries of this crazy process are lawyers. Society cannot afford to continue paying their legal bills and PIAB must be dramatically reformed in order to allow it to process far more cases.”
Peter Boland added, “Equally, the aggregated data from previous NCID reports suggested that broker commissions had climbed dramatically in recent years but what the more granulated data in this report makes clear is that broker commissions have been high all along, averaging 15% of premiums over the period of the analysis and climbing to 17% last year”.
Tracy Sheridan, owner of Kidspace play centres in Rathfarnham and Rathcoole and director of the Alliance, said, “Given the money being made, it’s clear that the insurance crisis will not be solved by vested interests. Government must move aggressively to resolve it, rebalancing the duty of care and bringing much greater underwriting capacity into the market to ensure that insurance costs are reduced to affordable levels and kept that way, because we cannot recover from Covid-19 as an economy or a society unless insurance is sorted.”