The Irish Times view on motor insurance: the consumer pays

The Central Bank’s annual motor insurance market report, the second installment of which was published this week, shows insurers made a total of €142 million of operating profits last year from motor coverage in the Republic. It also highlights that overall cost of claims per motor policy between 2009 and 2019 fell by 9 per cent, while the average insurance premium rose 35 per cent. This tells us nothing of the roller coast ride in the meantime, fuelling the Irish motor insurance industry’s boom-bust nature – with painful costs for drivers.

The industry’s historically shocking inability to price risk meant premiums were way too low a decade ago. Quinn Insurance’s implosion in 2010 was testament to that. So too were RSA Insurance Ireland’s need for a bailout from its UK parent a few years later and FBD’s requirement for a rescue investment from a Canadian financial group in 2015. The average Irish motor premium rose by 66 per cent from a low point in late 2013 to a peak of €714 in mid-2018 before dropping 9 per cent in late 2019.

The profits generated by insurers last year were strong by any standards. This has rightly added to criticism that insurers have been seeking to recoup heavy motor losses around the middle of the last decade by making above-average returns in recent times. The report has also found that injury claims of less than €100,000 that went down the legal route resulted in only a marginal financial benefit for injured parties in recent years compared to going through the Personal Injuries Assessment Board (PIAB).

However, the average €15,000 legal bill associated with such litigated cases (totalling €247 million over five years) was a multiple of the €500 legal expenses attached to typical PIAB cases. The cost is ultimately borne by motorists. The new Judicial Council is set to issue guidelines for personal injuries court awards next year. It's hoped that this will lead to lower court payouts. But there's also an urgent need to find a way to make it more difficult for individuals making personal injury claims to avoid the PIAB process.