Dublin: Motor insurance costs in Ireland have risen sharply, adding to the financial strain on vehicle owners already grappling with a growing cost-of-living crisis. The surge has been attributed to rising premiums, lengthy compensation processes, and escalating legal fees, according to new data from the Central Bank of Ireland.
The report reveals that motor insurance costs increased by 9% last year, with the average premium now at €623 — the highest level since 2014. The average minimum premium has climbed to €397, while the cost of damage claims per policy has risen to €192. Although minor injury claims have declined, this has been offset by an increase in the number and cost of major injury claims.
The Central Bank noted that while injury-related claim costs are still €205 lower than pre-pandemic levels, the overall claims rate for injuries has remained unchanged between 2022 and 2024.
Motor Insurers’ Profits Decline
The profitability of motor insurers has also dropped. In 2022, companies recorded profits of 12%, falling to 8% in 2023, and further down to 4% of total revenue last year. Damage claims now account for 54% of all settled claim costs, compared to an average of 29% between 2015 and 2021.
According to Robert Kelly, Director of Economics and Statistics at the Central Bank, the total cost of settled injury claims is 16% lower than the 2015–2019 average, despite the sharp rise in repair costs.
Rising Costs Blamed on Legal Fees and Maintenance
The Alliance for Insurance Reform criticised the high insurance costs, calling them a major contributor to the country’s cost-of-living pressures.
Its chief executive, Brian Hanley, said increasing vehicle maintenance costs, driven by supply chain disruptions and higher labour expenses, were pushing premiums higher.
However, Insurance Ireland, the industry body representing insurers, pointed to rising legal costs as the main driver. Chief Executive Moyagh Murdock said litigation expenses had increased by 27% and now represent 48% of the total cost of claims under €100,000. She urged the government to expedite reforms aimed at reducing legal costs and speeding up claims processing.
Government Urges Claimants to Use the Injuries Resolution Board
Minister of State for Financial Services, Robert Troy, has encouraged claimants to use the Injuries Resolution Board (IRB) rather than the courts to resolve disputes. He said the board could process claims in half the time and deliver comparable compensation, while reducing legal costs to just one-twentieth of what a court case would cost.
Troy also announced a new action plan for insurance reform, including the introduction of a transparency code and the establishment of a Cabinet sub-committee on insurance reform, set to meet next week.
Law Society Rejects Blame
In response, the Law Society of Ireland rejected suggestions that lawyers were responsible for rising insurance costs. The society stated that insurers were “deflecting blame” and failing to address their own pricing and management practices.
The Society emphasised that “legal professionals play an essential role in ensuring fair outcomes for claimants” and that the focus should be on improving efficiency and transparency across the insurance sector rather than scapegoating the legal profession.
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