Increasing damage claims contributed to the average cost of a car insurance premium rising by 4% to €655 last year, new research from the Central Bank shows.
However – according to the regulator’s 2025 Private Motor Insurance Report of the National Claims Information Database (NCID) – while year-on-year premium costs have increased, “the final quarter shows an encouraging decreasing trend”.
It found that premiums fell by 0.4% between the first and the second half of last year.
The Central Bank noted that after reaching a peak of €721 in 2017, average motor insurance premiums fell back to €557 in 2022 but “have been on the rise since then, increasing 16% from 2022 to 2025”.
The research also showed that while the cost of personal-injury claims has fallen in recent years, overall claims costs continue to rise.
The average cost per policy for an insurer increased by 10% last year to €424, which the Central Bank said was “primarily driven by damage claims”.
The report found insurers pay out 60% of premiums received in claims, with the impact of damage claim increases in recent years “particularly evident” in that they now account for 32% of premiums received.
The average cost per policy of damage claims reached €197 in 2025, the highest figure ever recorded in the NCID.
While the average cost of settling a damage claim increased by 2% to €3,024 last year, which was almost double (+96%) the 2015 – 2019 average.
The motor insurance report states that “historically, injury claims have been the most expensive element of car insurance costs and a key driver of premium prices. However, this has changed in recent years, with damage claims increasing”.
With regard to personal-injury claims, the Central Bank said “the impact of the Personal Injuries Guidelines continues to be evident in the data”, and that “following their implementation two changes have been observed in injury claims: average compensation has fallen by 13% compared to 2019; and the number of claims has fallen by 20%”.
The guidelines are used by both the courts and the Injuries Resolution Board (IRB) to determine compensation levels for personal injury claims.
All personal injury claims in Ireland must come to the IRB unless they are settled early.
The State body was established in 2004 to help improve the process of resolving personal injury claims, and to offer an alternative to what it calls “unnecessary litigation”.
Commenting on the Central Bank report findings, its Director of Insurance Seána Cunningham said: “The biggest cost for insurers in 2025 was paying out on claims, adding up to 60% of your premium.
“This is made up of damage claims at 32% of your premium and injury claims at 17% of your premium.
“The remaining 10% is paid out in legal and other costs associated with the claim settlement process.
“The data continues to reflect the positive impact of the personal injury guidelines, with decreasing injury claim numbers and average compensation levels contributing to market stabilisation.”
Market moving in ‘right direction’ – Insurance Ireland
CEO of Insurance Ireland Moyagh Murdock said the report “provides further evidence that the motor insurance market is moving in the right direction”.
She said: “While average premiums increased across 2025 as a whole, premiums declined during the second half of the year and have continued to trend downwards through 2026, broadly reflected in the CSO Motor Insurance Index.
“This demonstrates that insurance reform is delivering tangible benefits for consumers and that insurers have remained committed to passing those benefits through to policyholders.”
Ms Murdock also noted that “the continued impact of the Personal Injuries Guidelines is also a positive development and demonstrates the importance of sustained insurance reform”.
However, she added that ” while average compensation costs for litigated claims have fallen, the Central Bank’s findings show that legal costs remain disproportionately high, accounting for almost half of the total cost of litigated claims under €100,000″.
In relation to damage claims costs, the group representing insurers said they “remain under significant pressure, with the average cost per policy reaching €197 in 2025, the highest recorded in the NCID time series”.
“These developments underline the ongoing pressures associated with vehicle repair costs, replacement parts, materials and wider inflationary and supply-chain challenges,” it said.
4% increase in premiums ‘disappointing’
The Alliance for Insurance Reform said it was disappointed by “a further 4% increase in average motor insurance premiums”.
However, the consumer group welcomed what it called “more recent premium reductions and signs that the sharp increases in vehicle repair costs may be easing”.
“The average cost of settled vehicle damage claims increased by just 2% in 2025, following substantially higher increases in previous years,” the alliance said.
Regarding personal-injury claims, Tracy Sheridan – owner of Kidspace play centres in Rathfarnham and Rathcoole, and a board member of the Alliance – said: “The Personal Injuries Guidelines have delivered important progress in bringing compensation costs under control.
“Fair compensation for injured people is essential, but Irish awards for comparable injuries remain multiples of those in England and Wales.
“With the next review of the guidelines due in March 2027, we cannot afford to put that progress at risk.
“Government must prioritise publication and passage of the Judicial Council (Amendment) Bill, which would strengthen the review process through international benchmarking and greater involvement of the Injuries Resolution Board.”
The alliance also highlighted the report’s findings on litigation costs.
For motor injury claims settled through litigation at a total cost below €100,000, average legal costs of €19,902 exceeded average compensation of €19,600.
Average compensation for claims settled through the Injuries Resolution Board in the same cost category was slightly higher at €19,734, with average legal costs of just €791.
Ms Sheridan said: “When average compensation is virtually identical whether these claims are settled through litigation or the Injuries Resolution Board, yet average legal costs in litigation exceed the compensation paid, it highlights the importance of how claims are resolved.
“We need stronger action from Government to encourage more suitable claims to be resolved through the Injuries Resolution Board, ensuring fair compensation without unnecessary litigation costs.”
