Insurance Ireland says more stable sector and necessary reforms will deliver better value for consumers

• Premiums down 4% year on year and 9% between Q2 2018 and Q4 2019.
• Insurance is a cyclical business, so profitability needs to be looked at over time. Today’s CBI figures suggest that the market is turning.
• A more stable sector, delivered through Government reform, will reduce market volatility and bring more consistency for customers.
• Key to this is addressing the high and inconsistent cost of claims and strengthening the legal powers of PIAB to reduce the propensity to settle claims through litigation.
• Insurance Ireland members have delivered a range of forbearance measures to assist customers through the challenges of Covid-19, including motor premium rebates of €56m

Insurance Ireland has said that the motor claims data published today by the Central Bank of Ireland shows that premiums reduced 4% between 2018 and 2019 and 9% between Q2 2018 and Q4 2019, an indication that the market is turning. The industry body has said that a more stable sector, delivered through Government reform, will reduce volatility and deliver better value for consumers.

Moyagh Murdock, CEO of Insurance Ireland said: “We welcome the publication of the NCID report, which is useful and informative. However, we would like to stress that these figures should be looked at in context and over time. It is widely acknowledged that the insurance industry, more than other industries, experiences cycles of contraction and expansion. We would like to see less volatility over time. A stable, healthy and profitable insurance sector is fundamentally important in a functioning economy, facilitating business and enabling citizens to go about their daily lives securely.” 

Moyagh Murdock continued: “The private motor sector returned to profitability in the last few years, after incurring losses in previous years. We are now seeing a 4% reduction in the cost of premiums year on year and a 9% reduction between Q2 2018 and Q4 2019, which suggests that the market is turning again.”

Moyagh Murdock continued: “The key point is that the sector wishes to operate in an environment that is less volatile delivering more consistent outcomes for customers. The key lever in reducing volatility is the delivery of reforms needed to reduce the high and inconsistent cost of claims. That’s why we fully support the Government’s reform agenda through the personal injuries guidelines, the strengthening of PIAB and the review of duty of care laws among other areas. This in my view will deliver better value for consumers in the long run.”

The NCID report found that the average cost per claim is up 4% year on year, even if the frequency of claims is down. Compounding the situation, for claimants that settled for less than €100k through litigation before a court award, legal costs totalled 66% of the compensation award. It also takes 4.7 years for a litigated claim to be settled, bringing further volatility and uncertainty to the market in Ireland.

 Moyagh Murdock continued: “All of the data underlines the urgent need to tackle the high and inconsistent cost of claims. According to the Personal Injuries Commission, the average pay-out for soft tissue injury is 4.4 times that of the UK and soft tissue injuries account for 8 out of 10 claims. It’s also too expensive and takes too long to get settle claims in Ireland, bringing further volatility to the market. Overall we want to see a reduction in the propensity to settle claims using litigation through a stronger PIAB.”

Turning to the broader context of Covid-19, Moyagh Murdock pointed out that Insurance Ireland members have delivered a range of forbearance measures to customers to assist them through the current challenges, including putting money back into their pockets through motor premium rebates of €56m.

She concluded: “Ireland was unique among European markets in delivering this return to customers in 2020 in response to the pandemic.  But the overall experience of the market in recent years has been defined by volatility and uncertainty. Injury cost inflation remains the major challenge and is also impacting on the Employers’ Liability and Public Liability markets.”