The average price of motor insurance rose 9% between 2023 and 2024 to reach €623, according to the Central Bank.
It said that the average expected cost of claims per policy increased 3% to €397, the highest it has been since 2014.
The rising costs have been criticised by the Alliance for Insurance Reform which said it is directly contributing to the cost-of-living crisis.
The Central Bank’s report on the motor insurance market said the primary reason for the increase was the rise in damage claims such as repairs which reached €192 per policy while injury costs claims remained lower than pre-pandemic levels at €205.
The Central Bank said the average cost of smaller injury claims has reduced in recent years, but this has been offset by a rise in the cost of larger injury claims.
It said the cost of claims for injuries remained stable between 2022 and 2024.
Operating profit for motor insurance companies was 4% of total income in 2024 down from 8% in 2023 and 12% in 2022.
The Central Bank’s director of Economics and Statistics Robert Kelly said: “In 2024, damage claims accounted for 54% of settled claim costs, a significant increase from the 29% average observed between 2015 and 2021.”
He added: “The total cost of injury claims settled in 2024 was 16% lower than the average from 2015 to 2019.”
Speaking on RTÉ’s Morning Ireland Chief Executive of the Alliance for Insurance Reform Brian Hanley said that vehicle repair costs were the main contributing factor to rising motor insurance costs.
“We have seen in other countries, including our nearest neighbours, increases in motor premiums and that again is due to repair costs because of supply chain issues and the cost of labour and so on,” he said.
“But we have to balance that with other reforms that have come into the system as well.
“The personal injury guidelines have seen the awards stabilise and indeed bring them down more into line with other countries. Indeed, today’s report shows that awards have come down by about 25% in years.”
board member Ivan Cooper said: “Notwithstanding the increasing cost of vehicle repairs, injury claims account for more than half of the overall cost of settling motor claims, and we urgently need to see more claims settling at the injuries resolution board.”
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Insurance Ireland, the group which represents insurance companies, highlighted high legal costs.
Its chief executive Moyagh Murdock said: “The overall claims environment is being undermined by persistently high legal costs and longer litigation settlement timeframes.”
She added: “In 2024, legal costs for litigated claims were 27% higher than the 2015–2019 average, with legal fees making up 48% of the total cost for claims under €100,000.
“Frustratingly, for both consumers and insurers, this offsets the benefits of lower compensation awards under the personal injuries guidelines.”
More claims now going through Injuries Resolution Board – Troy
Minister with Responsibility for Financial Services Robert Troy acknowledged that costs in relation to damages have increased in the last 12 months and said that has “eroded some of the gains made” thanks to the personal injuries guidelines introduced a number of years ago.
Speaking on RTÉ’s Morning Ireland, he said the most recent action plan enhanced the role of the Injuries Resolution Board and they can see that more claims are now going through that.
He said they now need to build on those reforms.
“And that’s what we are doing. Within four months of being appointed to my role I published a new action plan on insurance reform and work has well advanced,” he said.
“Work in relation to the introduction of a transparency code is well advanced and the first Cabinet sub committee on insurance reform is meeting in the next number of weeks.
“We will have an opportunity for all the key stakeholders – because this is not just the responsibility of one department, it stretches across enterprise, it stretches across justice and it stretches into my own department of finance,” he said.
“So in the next number of weeks we will take stock in relation to where we’re at with the priority actions.”
Speaking earlier on the same programme, Insurance Ireland CEO Ms Murdock urged Minister Troy to fast track an action to address legal costs.
He said he would bring the issue to Minister Jim O’Callaghan to ensure that his officials “work at speed to bring forward the reforms needed in this area”.
Minister Troy also urged people who have a legitimate insurance claim not to go down the litigation route and to instead make use of the Injuries Resolution Board.
“The Injuries Resolution Board can deal with that claim in half the time. The compensation you will be awarded will be broadly similar,” he said.
“The big savings here is that the legal fees associated with the Injuries Resolution Board is one-twentieth of the cost of going down through litigation. By going through the Resolution Board it is far more cost efficient, timely and more effective for the claimant than it is going through litigation.
“And it saves the legal fees being put on the cost of your premium,” he added.
The Law Society of Ireland has accused the insurance industry of “trying to blame the legal profession” for the cost of insurance premiums, which it said was “a great way for insurers to avoid taking responsibility”.
In a statement, the society said there have been “multiple reforms in this area,” but it said there is “a steady stream of reports showing that insurance companies are continuing to enjoy high profits and are not using those to avert the need to increase premiums”.
