Insurance Ireland notes the reference made by the IMF in a report published today on insurance penetration in Ireland being almost three times the EU average and average premiums per capita being four times the EU average.

It is important to note this statement does not mean insurance premiums are four times the EU average, rather it is the total spend on insurance in the economy by head of population.

The figure for Ireland is higher than some countries such as Italy and Germany but is also lower than others, such as the United Kingdom and The Netherlands. A factor which needs to be noted, particularly when making comparisons with other European states, is certain countries have higher taxation rates and more developed social insurance systems. Therefore, a greater proportion of the costs associated with accidents are catered for through the social insurance system. This has an impact on the level of compensation awarded for insurance claims made against insurance companies and ultimately on premium rates and volumes.

In welcoming the IMF report, Insurance Ireland notes the strength of the sector with a total gross written premium of €76 billion, 81.5% of which is insuring risks outside of Ireland, illustrating the strong international dimension. The report also highlights the challenges facing non-life domestic insurance sector and states “the frequency of claims and increases in average claims costs have impacted underwriting results”. The report also highlights factors such as the increase in court award limits and the “Overdue review of the Book of Quantum, leading to inadequate settlements by the Injuries Board being rejected, this is precipitating additional legal costs in cases”.