The cost of insurance claims has fallen so my premium is coming down too, right?
Um, you are half right. A new report from the Injuries Resolution Board says the volume and total value of personal injury claims has fallen dramatically over recent years.
Why is that?
There are multiple reasons, including changed guidelines on payouts for minor injuries, reform of the Injuries Resolution Board and more emphasis on insurance fraud making it harder for those exaggerating compensation claims to get payouts.
That is great. So it means premiums are falling?
Anyone who has received their motor insurance renewal might be left scratching their heads at that statement because the cost of motor insurance is climbing at more than 10 times the rate of general inflation.
But if claims are falling, why aren’t premiums falling?
Well, the data from the injuries board doesn’t look specifically at motor insurance. While it found that there was a 40 per cent fall in claim volumes between 2019 – the year before the pandemic – and 2023, the claims cover all aspects of public liability insurance.
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[ Personal injury guidelines result in sharp fall in claimsOpens in new window ]
And where are the claims falling?
Claims involving personal injuries sustained by visitors to businesses and public spaces fell 40 per cent, down €20 million in five years. Claims in cafes, hotels and restaurants more than halved while there has been a low volume of claims for accidents in childcare settings
So insurance in some areas is falling, is it?
Not according to the Alliance for Insurance Reform which has suggested that the insurance sector is keeping prices high in order to make as much money as possible. “In recent years the only thing increasing faster than public liability premiums has been insurer profits,” said the chief executive of the umbrella group Vincent Jennings.
What else did he say?
He noted that “for years the message from insurers was that premiums track the volume of claims and the cost of settling them. Today’s report belies that narrative and we need the next government to step up and address this fundamental unfairness.” He said that businesses, sports, community and voluntary groups “are currently facing crippling costs of doing business and the injuries board data highlighting falling claim volumes and award sizes tells us public liability insurance shouldn’t be another one of these costs.”
And what about the insurance sector?
It insists that the insurance sector has been loss-making for years and pointed to a recent report from the Central Bank that showed the car sector made profits of only 0.5 per cent last year.
But what about other sectors?
It has defended the price of premiums by pointing out there is full employment in Ireland with the cost of wages, materials and construction all climbing, which feeds into higher costs for the sector.
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