Personal Injuries Guidelines
August 8, 2023
Following on from Recommendation 11 within the Cost of Insurance Working Groups Report of January 2017, the Central Bank (National Claims Information Database) Act 2018 commenced in January 2019.
Private motor insurance was selected as the initial class of insurance in the scope of the NCID.
The legislation requires the Central Bank to publish a report on a yearly basis. The first report was issued in December 2019 and the second report was issued this month and can be viewed here.
The report has raised a lot of media coverage with the main focus being that insurers made profits of €142m, whilst the costs of settling claims reduced.
Part 1 – Trends in the Cost of Claims:
The key findings between 2009 and 2019 were:
- the average cost of claims per policy reduced by 9%;
- the average cost of claims per policy reduced by 9%;
- the average cost of damage claims per policy decreased by 43%;
- claims frequency reduced by 45%; and
- injury claims accounted for 7% of claim numbers but 74% of claims costs in 2019.
Part 2 – The Costs of Insurance Premiums:
The key findings between 2009 and 2019 were:
- the average premium was 35% (€676) higher in 2019 than in 2009;
- between 2009 and 2013 premiums decreased by 13%;
- between 2013 and 2018 premiums increased by 63%; and
- between 2018 and 2019 premiums decrease by 4%.
Part 3 – Comparison of Premiums and Claims Costs:
The key findings between 2009 and 2019 were:
- the industry loss ratio averaged 72%;
- it reached a high of 92% in 2014; and
- it reached a low of 57% in 2017 & 2018.
Part 4 – Trends in the settlement of claims:
The key findings between 2015 and 2019 were:
- between 2015 and 2019 half of all injury claims were settled directly;
- in 2019 35% (33% in 2018) were settled through litigation, whilst this was 29% in 2015;
- direct settlements averaged €13,427 with average legal costs of €1,397;
- average injury claims settled through PIAB were €23,137, with average legal costs of €716; and
- average injury claims settled through litigation were €46,214 with average legal costs of €23,409.
Part 5 – Income and expenditure:
The key finding for 2019 was the combined operating ratio (COR) in 2019 was 83%. The operating profit was 10% of total income.
Conclusion
Understandably, this report has piqued a lot of interest. Going forward, the Central Bank is the process of obtaining information in relation to liability claims with a view to providing a report related to that class of business.
It is interesting to note within the report that on average 90% of all claims fall below a settled cost of €100,000. However, within this category the average cost for a case settled through PIAB is €22,206 plus costs of €1,709, whilst a litigated case has an average of €23,807 with costs of €16,704. Therefore, whilst the actual settlement cost does not show much of a difference, the biggest issue is the legal costs attached to same.
