The Minister of State with special responsibility for Financial Services, Credit Unions and Insurance, Seán Fleming TD, welcomes today’s publication of the third National Claims Information Database (NCID) report on private motor insurance.

“I would like to acknowledge publication of the Central Bank NCID motor report, undated to end 2020. This represents a rich source of data which will be carefully considered by Government as the insurance reform agenda continues. The NCID remains the best tool to holding both insurers and the legal profession to account for their respective contribution in influencing the cost and availability of insurance. The new Judicial Council Personal Injuries Guidelines enacted in 2021 are a significant development in terms of settling claims and in future reports the Bank will look to begin assessing their impact”.

The Minister also notes that it is possible to see the impact of the COVID-19 pandemic in this report, with a significant reduction in the number of private motor claims and a subsequent decline in claims costs. As also highlighted by the CSO, the downward trajectory in motor premium prices continues – down 7 per cent in 2020 and 16 per cent from their peak at the end of 2017, with rebates to customers during 2020 playing a small role in this. The Minister welcomes these decreased premiums and the wider softening of the motor insurance market since 2017. Enhancements from previous reports are included with further improvements planned.

2020 was the fourth consecutive year of profits for motor insurers, with operating profits across the sector standing at 12 per cent, following considerable losses made between 2014 and 2016. The Minister notes that it is important to have a financially stable and profitable insurance sector to attract providers, and they are hopeful that volatility in profits and losses seen in the past will no longer be a feature of the Irish market. They note it is now more important than ever that firms provide cover to sectors currently experiencing shortages in other areas of cover such as public and professional liability insurance, and pass savings being made to their customers. Over the course of this week Minister of State Fleming will be meeting the CEOs of the main insurers to discuss this and other issues.

Note to Editors

The Central Bank of Ireland has today (16 November 2021) published the third annual Private Motor Insurance Report of the National Claims Information Database (NCID). The NCID compiles aggregate data received from insurers. This allows the Central Bank to publish an annual report containing analysis on the cost of premiums, the cost of claims, the aggregated financial performance of firms providing this insurance, and key settlement channel information. The NCID is intended to facilitate a more in-depth analysis of annual trends in insurance claims. This was seen as key to developing an understanding of how claims costs are impacting premiums, in particular understanding the relationship between the price paid by a customer for motor insurance and the cost to insurance undertakings. Increased data availability also allows insurance firms to plan for costs into the future, which in turn should provide stability in relation to premium prices, and benefit consumers.

This third annual Motor Insurance Report of the NCID captures data for the calendar year 2020. The impact of Covid-19 is therefore highlighted within the report.

The Central Bank has identified the following key findings -

Premiums

On an annual basis, average earned premium decreased by 7% from 2019 to 2020.
On a quarterly basis, as at Q4 2020, the average earned premium has decreased by 16% since Q4 2017.
The decrease in 2020 was influenced to some extent by Covid-19 premium rebates. In respect of private motor insurance, insurers issued premium rebates of €42.5m (equating to 3% of Gross Earned Premium in 2020).
During the period 2009 to 2020, the annual average earned premium increased by 26%. This can be split into three distinct periods -
Decreased by 12% between 2009 and 2013;
Increased by 62% between 2013 and 2018;
Decreased by 11% between 2018 and 2020.

Cost of Claims

The average claim cost per policy decreased by 20% from 2019 to 2020, reflecting the impact of Covid-19.
There was a significant drop of 26% in the frequency of claims (injury and damage combined) in 2020. However, the average cost per claim increased by 9% from 2019 to 2020.
During the period 2009 to 2020 claims accounted for 69% of earned premiums (on average);
Claims costs as a percentage of earned premiums were at their highest in 2014; accounting for 92% of earned premiums that year.
By contrast, claims costs as a percentage of earned premiums reached their lowest point in 2020, accounting for 50% of earned premiums and again reflecting the impact of Covid-19.

Income and Expenditure

Insurers’ Operating Profit for 2020 amounted to 12% of total income. Between 2009 and 2020, Operating Profit amounted to 3% of total income.
There were three distinct periods observed; operating profits of 7% from 2009 to 2012, operating losses of 10% from 2013 to 2016, and operating profits of 9% from 2017-2020.
Reinsurance had a much more material impact on profitability between 2017 and 2020, at a cost of 8% of total income, than in the years prior to this.
From 2009 - 2012, investment income accounted for 9% of total income. This decreased to 6% of total income from 2013 – 2016, and decreased further to 3% between 2017 and 2020.
In terms of the Combined Operating Ratio (COR):
For 2020, the COR amounted to 77% gross of reinsurance and 79% net of reinsurance.
Between 2009 and 2020, the COR was 98% gross of reinsurance and 103% net of reinsurance.
2011 was the only year between 2009 and 2016 in which claims and underwriting expenses were less than earned premiums.
Claims and underwriting expenses have been less than earned premium for all years between 2017 and 2020.

Settlement of Injury Claims

In terms of injury claim settlements for claims settled between 2019 and 2020:

36% of claimants settled directly before engagement with the PIAB,
13% settled directly after engaging with the PIAB,
15% settled through the PIAB,
34% settled via litigation before a court award,
2% settled via litigation, with a court award.

In terms of injury claim settlements between 2015 and 2020 and duration of claim:

Claimants that settled directly (before or after engagement with the PIAB) had an average duration of 1.3 years,
Claimants that settled through the PIAB had an average duration of 2 years,
Claimants that settled via litigation (before or with court award) had an average duration of 3.9 years,
22% of costs related to claimants settling directly, 11% to claimants settling through the PIAB, and 67% to claimants settling via litigation.

For 94% of claimants, the total cost of a claim was less than €100K and the average settled costs for these claims were:

Average compensation costs for direct claimants were €13k, with average legal costs of €1.4k;
Average compensation costs for PIAB claimants were €22k, with average legal costs of €0.7k;
Average compensation costs for litigated claimants were €23k, with average legal costs of €15K.

The Minister of State, Seán Fleming TD, welcomes today’s publication of the third National Claims Information Database (NCID) report on private motor insurance

Premiums

Cost of Claims

Income and Expenditure

Settlement of Injury Claims