Ireland’s motor insurance market has been the subject of intense consumer criticism over recent years as the cost of insuring a car in this country has spiralled over the last decade. Ireland’s insurance industry blames the legal system for excessive injury awards, while others say insurers are reaping major profits by gouging customers by charging hefty premiums.

In May last year, the European Commission opened an investigation into Ireland’s motor insurance market to assess whether insurance companies were operating as a cartel.

In 2009, the average cost of car insurance stood at €498 but this has risen sharply to an average of €706 in 2018

While that investigation is ongoing, a recent report by the Central Bank of Ireland on the cost of motor insurance has brought new information to light. According to the Central Bank, the average cost of private motor insurance in Ireland has risen by 42% in the 10-year period from 2009 to 2018.

In 2009, the average cost of car insurance stood at €498 but this has risen sharply to an average of €706 in 2018. The sharp rise in the cost of motor insurance according to the Central Bank’s data is contrary to claims by insurers that premiums have fallen.

Cost of claims

At the same time as the cost of motor insurance has risen, the Central Bank report shows that the average cost of claims per policy has fallen 2.5% in the same period. This is the cost of all claims relative to all motor insurance policies held in the country.

The Central Bank’s data shows that the cost of claims per motor policy has fallen from €437 in 2009 to €426 in 2018.

Additionally, the Central Bank report also shows that the number of claims made in Ireland relating to motor insurance has fallen by 40% over the 10-year period, with injury claims down 20% and cost of damage claims falling 43%.

The cost of paying for damage has risen by a negligible 2%

While the number of claims and the average cost of claims per policy has fallen, the Central Bank report does show that the average cost of paying out a motor insurance claim increased by 64% from 2009 to 2018.

The cost of paying for damage has risen by a negligible 2% in the period but the cost of paying for injuries has risen by 54% since 2009 to an average payout of almost €48,000.

Injury claims accounted for 8% of total claim numbers in 2018 but a whopping 75% of claims costs, said the Central Bank. Conversely, damage claims accounted for 92% of claim numbers and 25% of claims costs.

Legal costs

The Central Bank report also reveals, for the first time, the legal costs associated with motor insurance claims, which is something the insurance industry regularly cites as a reason for expensive motor premiums.

Claims settled in the courts receive an average compensation of almost €45,400

According to the Central Bank, the average legal cost of settling a claim in court amounts to just over €23,000.

Claims settled in the courts receive an average compensation of almost €45,400 and take an average of 4.4 years to be paid out fully. In contrast, claims settled directly have an average legal cost of just €1,385 with the average payout under €12,000. However, these claims are settled in less than two years.

Motor insurance claims settled through the Personal Injury Assessment Board (PIAB) have an average legal cost of just €753 and have an average payout of €22,630. Claims settled via the PIAB generally take 2.5 years to be fully paid out.