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PI claims 34% lower than under Book of Quantum

The fourth Central Bank of Ireland private motor insurance report of the National Claims Information database finds the average insurance policy decreased by only 2% to €607 from 2020 to 2021.

The total earned premium for private motor insurance in Ireland in 2021 was €1.38bn.

While claims cost per policy increased by 1%, this figure was still 20% below the 2019 pre-virus level.

Claims frequency increased by 11% but is still 15% below pre-virus levels.

The average cost of a claim decreased by 9% and the figure for claims as a percentage of premiums was 49%.

From 2009 to 2021:

• On a quarterly basis, as at Q4 2021, the average earned premium decreased 17% from its peak in Q4 2017,
• Claims costs were on average 67% of premiums,
• Claim costs as a percentage of premiums were at their highest point in 2014 at 92% and at their lowest point in 2020 at 47%,
• Operating profit was 13% of total income,
• Combined Operating Ratio (COR) was 80% gross and net of reinsurance,
• Reinsurance was 7% of total income,
• Investment income was 2% of total income.

Across all years 2009 to 2021, operating profit was 4% of total income, in which there were three distinct periods:

• A profit of 8% of total income from 2009 to 2012,
• A loss of 9% of total income from 2013 to 2016,
• A profit of 11% of total income from 2017 to 2021.

For injury claims settled in 2021, 16% of claimants settled under the new Personal Injuries Guidelines.

For claims settled through PIAB in 2021, just 20% settled under the guidelines. 

Average compensation was 34% lower than for claims that were settled with reference to the Book of Quantum .      

Just 35% of injury claimants settled directly, before PIAB (12% of costs) while 14% settled directly, after PIAB (11% of costs).

And 16% settled through PIAB (10% of costs) while 34% settled through litigation before a court award (66% of costs) and only 2% settled through litigation, with a court award (1% of costs).

Settlement durations

Settlement durations between 2015-21 varied from 1.4 years for claims settled directly, two years through PIAB, and 3.9 years through litigation.

In the period 2015-21, for 94% of claimants, the total cost of a claim was less than €100k. 

Where settled directly, average compensation was €13,933 and average legal costs €1,568.

Where settled via PIAB, average compensation was €21,856 and average legal costs €686.

Where settled via litigation, average compensation was €24,174 and average legal costs were €15,567.

Commenting, the Central Bank's Robert Kelly said: "Today's report provides data on the calendar year 2021. Accordingly, it captures the continuing impact of COVID-19 and related Government restrictions on the motor-insurance industry during that time. While claims cost per policy and the frequency of claims both increased from 2020 to 2021, overall, these metrics have decreased considerably from pre-pandemic levels.

Data

"The report includes initial data on the impact of the Personal Injuries Guidelines, which were introduced in April 2021.

"During 2021, 16% of claimants settled with reference to the guidelines. While noting that PIAB makes up 8% of injury-claim costs settled in 2021, data for claims processed through PIAB show average compensation was 34% lower for claims settled under the guidelines, than for claims that settled with reference to the previously applied  Book of Quantum .”