Damning report shows motor insurers making huge profits after hike in premiums
A DAMNING report from the Central Bank shows insurance companies are making huge profits on the backs of motorists.
The report shows premiums costs are up, but claims down. And insurance company profits on motor cover are at a high.
Drivers have been hit with surging premiums despite a fall in the cost of claims.
The Central Bank report shows that average motor premium was up by 42pc between 2009 and last year.
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Average premiums were just over €700, some €265 more than in 2009.
Over the same period the cost of claims per policy fell by 2.5pc.
Central Bank statisticians found the average cost of claims per policy was €226 last year, down almost €10 per motorist since 2009.
Profitability for motor insurers operating in this market was 9pc of total income last year. This is considered to be an extremely healthy level of profits for motor insurers.
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The findings are sure to re-ignite anger towards insurers, who have been heavily criticised for hiking premiums, being highly selective about what risks they take on, and for voiding contracts when there is a claim.
The Alliance for Insurance Reform said the Central Bank report “lays bare the scale of the greed” of the insurance industry.
The figures are for all motor insurers in the market, including those offering cover which are based outside this country.
Although the cost of injury claims are up in the last decade, the number of claims being submitted to motor insurance companies are down. There has also been a fall in the cost of claims for damages to motor vehicles.
And lawyers do not come well out of the report either, as legal fees make up a high proportion of claims that are litigated.
Average legal costs amount to more than half the amount awarded for injury claims.
Most litigated claims take far longer to settle than those that go through the State’s Personal Injuries Assessment Board.
However, the average compensation amount is the same for cases settled by the Injuries Board as those that go though the courts.
But cases that go through the courts incur huge legal costs, prompting the many to question what lawyers are adding to the process other than income for the profession.
And it takes more than four years for a claims case to come to a conclusion if it is litigated. Those settled by the Injuries Board take half this time.
Average settlements for litigated cases are €45,000, with legal costs averaging €23,000 in these cases, the Central Bank data obtained from motor insurers shows.
The information comes from the first edition of the new National Claims Information Database, which has been put in place following a Government recommendation.
It is designed to improve data and transparency on insurance.
Junior Finance Minister with responsibility for insurance reform Michael D’Arcy said the report “shows that the insurance and legal sectors are both culpable for the difficulties we have faced over the last number of years with the price of motor insurance”.
“It appears that insurers engaged in under-pricing in the early part of this decade and then increased premiums beyond levels that were needed to cover losses over parts of the period, particularly between 2014 and 2017, and are now making significant profits as a result.”
He said the legal sector has been charging considerable fees.