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Increases in business insurance slowed in 2020

A report from the Central Bank shows that increases in most insurance premiums covering employers’ liability, public liability, and commercial property slowed in 2020.

The regulator says that almost 85% of policies sold in these areas relate to packages that include a combination of the three types of policy.

According to the second annual report from the National Claims Information Database (NCID), which collects data on premiums and claims from insurers, there was a rise of 2% in these policy packages in 2020 compared with 2019.

The NCID report says the smaller increase followed a 25% jump in premium prices between 2013 and 2019.

The Central Bank warns, however, that the broad range of business sectors covered by these categories makes it “extremely challenging” to provide meaningful data on the overall average cost of claims or premiums per policy.

14% of injury claims through PIAB

The report also shows that almost 60% of injury claims linked to employers’ liability and public liability were settled through litigation between 2015 and 2020.

Litigation also accounted for 80% of injury settlements costs.

Almost 30% of injury claimants in these sectors settled directly with the insurer, while 14% of claims went through the Personal Injuries Assessment Board (PIAB).

On average, the report says, employers’ liability and public-liability claims settled through litigation cost more and take longer to settle than claims settled directly with the insurer or through PIAB.

It points out, however, that for more than 90% of injury-claim settlements – those for which the total cost of settlement is less than €150,000 – the average compensation costs are relatively similar for claims settled through PIAB and litigation.

The average legal fees for claims settled through litigation, however, are “significantly higher”, according to the report.

Injury claims represented the largest number of claims and costs for employers’ liability and public-liability insurance between 2015 and 2020, representing 68% of claimants and 92% of settlement costs, respectively.

The average cost of a claim in the employers’ liability category rose by 37% in 2020, with an increase of 24% in the cost of public-liability claims.

The average cost of a commercial-property claim jumped by 44%, but the Central Bank points out that figures in this sector have been volatile in recent years.

Bigger losses on commercial property

The figures show that insurers recorded an operating loss of 11% of total income on employers’ liability, public liability, and commercial property in 2020 – mainly due to an operating loss of 30% on commercial property.

COVID-19 restrictions led to a significant increase in business-interruption insurance claims, which are included in commercial property, in 2020.

Across the years from 2009 to 2020, however, there has been an operating profit of 3% of total income.

The NCID report says that 100% of what insurers took in in premiums from 2009 to 2020 went towards costs – 73% to cover claims and related costs, and 27% to cover other underwriting expenses.

These figures exclude reinsurance, investment income, and any other earnings recorded by insurers.

COVID impact

Mark Cassidy (Central Bank director of economics and statistics, pictured) said that the report provided some insights into the impact of the COVID-19 pandemic on these areas of insurance.

“We can see, for example, from the data that insurers made a significant operating loss on the commercial-property line,” he said.

Cassidy added that future reports would provide initial insights into the effect of the Personal Injury Guidelines that came into effect in April last year.