Rising Irish Injury Claims Costs

• Dept. of Finance Report shows third party injury costs per claim are £11,000-£13,000 in the UK compared to €40,000-€60,000 in Ireland
• The vast majority of claims inflation comes from smaller third-party injury claims, the cost of which increased at an average rate of 7.3% per year, up 42% in total from 2011-2016
• Insurers have prudently managed their costs, such as damage claims, to offset increasing injury claims costs

The second Motor Insurance Key Information Report, published today, shows the claims trends in the market from 2011-2016. The key findings are:

• The vast majority of claims inflation comes from smaller third-party injury claims, the cost of which increased at an average rate of 7.3% per year, up 42% in total from 2011-2016
• Third-party injury costs per claim are £11,000- £13,000 in the UK compared to €40,000-€60,000 in Ireland
• Injury frequency is lower in Ireland than the UK, but our injury costs are far higher
• It is also taking longer to settle claims with the report noting that ‘fewer recent claims have settled, leading to higher outstanding case reserves and actuarial reserves’
• Over the period 2011-2016, the increase in the average earned premium per policy was 22%

Overall, ultimate claims costs were up 14% from 2011-2016 however this figure is significantly reduced by reductions in damage claims costs in the period which were prudently managed by insurers to offset increasing injury costs

Commenting on the findings, Kevin Thompson, CEO of Insurance Ireland said, “This Department of Finance report shows the steep increases in injury claims costs in the Irish motor market in recent years and the urgent need to reform these costs.”

“The cost of motor third party injury claims below €250,000 increased by 42% from 2011-2016, showing a worrying acceleration in costs associated with smaller, more frequent claims which are mainly soft tissue or ‘whiplash’. The comparison with the UK is stark, with ultimate injury cost per claim in the UK ranging from £11,000 to £13,000 compared to €40,000 to €60,000 in Ireland.”

Kevin concluded, “The Department of Finance noted that this was a detailed and rigorous process of data collation and Insurance Ireland believes it is important that the insights it provides into the claims environment are acted upon. For instance, it is clear insurers are trying to manage claims inflation by reducing the costs they have direct control over, such as damage claims.

However, a combination of increased injury costs and longer settlement times are impacting on the market and these must be addressed through the policy solutions in the Cost of Insurance Working Group Report. Insurers are committed to the delivery of the National Claims Information Database and would encourage all stakeholders to provide their data to allow for policy responses to address the claims costs in the market.”

Link to the Rising Irish Injury Claims Costs report. If you have any questions about your insurance costs, contact us here.

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