Motor insurance premiums rise in Ireland despite fall in claims

Premiums have risen since 2009 despite the cost per policy of all claims decreasing in the same period.

Insurers operating in Ireland have seen profits rise by 9% to €142 million on their motor insurance lines last year. The figures were included in the latest report on the motor insurance industry published by the Central Bank and are based on information contained in the National Claims Information Database. Motor insurers saw claims costs fall to 59% of total motor premiums in 2019, which is down from a high of 92% in 2014, but slightly up from 2018's figure of 57%. The cost per policy of all claims reduced by 9% between 2009 and 2019, or to roughly €400 per policy. Over this period, the average cost per policy decreased by 16% from 2009 to 2010, increased by 12% from 2010 to 2014, decreased by 2% from 2014 to 2018 and decreased 1% from 2018 to 2019. The report also found that average premium rose by 35% between 2009 and 2019 to €653, up from an average of €431 at the end of 2013, but down from a high of €714 in the middle of last year. The report from the Central Bank also found the number claims has dropped consistently over the years, with damage claims accounting for 93% of all claims, but it is personal injury claims which prove more costly, accounting for 70% of all payouts on average. The overall cost of claims from 2009 to 2019 rose from €792 million to €819 million; this is despite the number of motor insurance claims falling from 290,516 in 2009 to 182,506 in 2019. When insurers’ normal running costs are taken into account, it gives a combined operating ratio of 83%. The combined operating ratio is calculated by taking the sum of incurred losses and expenses and then dividing them by the earned premium. A ratio below 100% indicates that the company is making an underwriting profit, while a ratio above 100% means that it is paying out more money in claims that it is receiving from premiums.