Insurer profit margins grow by 55% in twelve months.

Today the Central Bank published its NCID Liability Report for 2022. The report deals with Public, Employer and Commercial Liability cover.

Key findings from the report include:

  • Insurance company profit margins grow by 55% in 12 months, from 9% in 2021 to 14% in 2022.
  • Insurance premiums for liability cover increased by 8% in 2022.
  • The total cost of settlements continues to drop and is now down 14% or €43 million on 2019 settlement levels.
  • Legal costs increased overall compensation costs by 60%.
  • Operating profit on public liability premiums was 15% in 2021 and 2022 – a sector that urgently needs new market entrants and greater competition.

Speaking today, grocery store owner and Alliance for Insurance Reform Board member, Flora Crowe said: “The cost of doing business in this country is already too high. This report proves what we already know – despite all the reforms the Government introduced, and despite the decrease in the volume and cost of claims, our insurance premiums continue to rise. The Government’s insurance reforms still haven’t delivered for business.”

The NCID report highlights how some sectors have been hit particularly hard by rising premiums. In the three years between 2020 and 2022, the percentage change in average premium for the “Accommodation and Food Sector” increased by 24%, for “Transportation and Storage” by 16% and in “Human Health and Social Work Activities” by 22%. “Arts, Entertainment and Recreation Sector” premiums rose by 8% in these three years but this comes on the back of a 111% increase in the six years prior.

Flora continued: “These sectors are the lifeblood of our communities. In the absence of meaningful competition and further Government action, insurers have shown they won’t voluntarily reduce premiums, despite a 41% reduction in the volume of claims since 2019 (PIAB, Annual Report 2022) and various other reforms such as the Judicial Guidelines.”

Interestingly, “Financial and Insurance Activities” have seen their premiums come down 37% in the same three years.

While the number of claims has reduced on the previous year’s figures, overall legal costs continue to rise. In 2022, legal costs (€97m) increased compensation costs (€163m) by some 60%, showing the need for more uncontentious cases to settle without unnecessary recourse to expensive litigation. The role of the Injuries Resolution Board (formerly PIAB) will be vital in this regard.

The CTTC is a proud member of the Alliance for Insurance Reform


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