- First Private Motor Insurance Report provides key statistics on the private motor insurance industry in Ireland.
- Key findings include figures on the cost of claims, premiums levels, and how private motor insurance claims are settled.
- Report will play an important role in supporting evidence based decision making as well as providing greater of transparency to the market.
The Central Bank of Ireland has today published the first annual Private Motor Insurance Report of the National Claims Information Database (NCID). The NCID was established on foot of a recommendation of the Government’s Cost of Insurance Working Group (CIWG). The publication of this Report delivers on a key Central Bank commitment to improve transparency and the understanding of the issues affecting the functioning of the insurance market in Ireland.
Discussing how better data can inform better policy, this morning Deputy Governor Sharon Donnery said “this first report will play an important role in bringing a greater level of transparency to the market, and providing data to support evidence based decision-making. Better data on insurance claims can inform the policy debates in Government, in the Oireachtas, in the firms and in wider society, as well as informing our own work in the Central Bank”.
The statistics are based on data gathered from insurance undertakings providing private motor insurance products in Ireland, including foreign companies selling into the Irish market. The findings reflect an aggregate view of all undertakings. The legislation underpinning the collection of data for the NCID precludes publishing data at an individual institutional level.
Speaking specifically on the publication, Mark Cassidy, Director of Economics & Statistics said: “Today, the Central Bank is publishing analysis of the data gathered by the NCID. The NCID is a positive step for data availability and insight into the insurance sector as its scope includes all insurers selling private motor insurance in Ireland, regardless of the country of authorisation.
“The Central Bank is focused on ensuring that the insurance sector sustainably serves the needs of the economy and its customers. This includes ensuring that claimants can have confidence that insurance claims will be paid when required and that consumers have clear information to allow them to make informed decisions.
“While the Central Bank does not have a mandate to fix prices in the insurance sector, today’s Report will assist the Cost of Insurance Working Group, Government, Oireachtas and wider stakeholders in their consideration of the relevant issues.”
The data highlights the importance of the cost of claims to the level of insurance premiums. However, the Report also highlights the cyclicality of the insurance market, in particular the growth in insurance premiums relative to the cost of claims, and the growth in profitability of motor insurance underwriting since 2015. The Report also provides important information on how claims are settled, the time this takes and the legal costs associated with the different settlement channels.
Some of the key statistics from the Report are as follows:
Cost of claims per policy: Between 2009 and 2018, the average cost of claims per policy decreased by 2.5% from €437 in 2009 to €426 in 2018. Between 2009 and 2013 claims costs reduced by 14% to €375, followed by an increase of 14% to €426 in 2018.
Premium per policy: Between 2009 and 2018, the average premium per policy increased by 42% from €498 in 2009 to €706 in 2018. Between 2009 and 2013, average premiums decreased by 13% to €435, followed by an increase of 62% to €706 in 2018.
Loss Ratio: Claims were on average 75% of premiums between 2009 and 2018. This peaked at 94% in 2014 before dropping to 59% in 2017. In 2018, it was 60%.
Number of claims: Between 2009 and 2018, claims frequency reduced by 40%. In this time injury claims reduced by 20% and damage claims reduced by 43%.
Cost of a claim: Between 2009 and 2018, the average cost of a claim increased by 64%. In this time injury claims increased by 54% and damage claims increased by 2%.
Settlement channels: In the period 2015 to 2018, 53% of all injury claimants settled directly while 31% of injury claimants settled through litigation; 16% of injury claimants settled through PIAB.
Direct Settlements: Directly settled injury claims had an average compensation of €11,674 in the period 2015-2018, in addition average legal costs were €1,385, and claims took on average 1.7 years to settle.
Personal Injuries Assessment Board (PIAB) Settlements: Injury claims settled through PIAB had an average compensation of €22,631 in the period 2015-2018, in addition average legal costs were €753, and claims took on average 2.5 years to settle.
Litigated Settlements (total): Injury claims settled through litigation had an average compensation cost of €45,390 in the period 2015-2018, in addition average legal costs were €23,031, and claims took on average 4.4 years to settle. Litigated settlements costing more than €100k account for 15% of claimants settling through litigation but account for 53% of total litigated costs and involve a number of very large settlements. These very large settlements can have a significant impact on the average compensation and legal cost figures.
Litigated Settlements less than €100k: Injury claims settled through litigation with total settlement costs less than €100k (85% of litigated claimants) had an average compensation of €23,199 in the period 2015-2018 (i.e. comparable with the average compensation of claims settled through PIAB) and average legal costs of €14,684.
2018 private motor revenue results: Insurers’ Gross Combined Operating Ratio (COR) on private motor business was 81% and Net COR was 88%. As firms do not account for private motor insurance business separately, an income and expenditure statement was prepared on a proportioned basis.
The nature or severity of the injury claims settled in the different channels could vary significantly. This should be borne in mind when comparing the cost and time of settling injury claims in the different channels.
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. Legislation was required to confer this new function on the Central Bank, and the Central Bank (National Claims Information Database) Act 2018 commenced in January 2019. The legislation requires that the Central Bank publishes a report on an annual basis.
The Personal Injuries Assessment Board (PIAB) is Ireland’s independent state body which assesses personal injury compensation.
The Central Bank introduced new rules which came into force on 1 November providing greater transparency to policyholders at the point of renewal for certain non-life insurance products.
Further information is available on the Central Bank’s website.