Non-life insurance industry claims costs growing, according to Central Bank of Ireland inspection
Published today the Bodily Injuries Thematic Review, which assessed the extent to which the industry had measured and recognised these trends in their data from 2012 to 2014, and to inform its supervisory engagement.
Sylvia Cronin, Director of Insurance Supervision, said that the non-life insurance industry was facing a number of challenges from legislative changes and the economic environment.
“Increasing court awards economic activity and increasing numbers of vehicles on the roads are some of the factors pushing up insurance claims in Ireland. This uncertainty has increased further due to recent developments such as court awards and other legislative changes, including the proposed introduction of Periodic Payment Orders.
“The review highlights the increases in claims frequency and slowdown in claims settlement patterns in recent years. Overall, it seems that the money set aside for private motor by some companies is approximately half the level per vehicle compared to others for more recent accident years. While there are valid reasons for some of these differences, companies need to carefully consider the extent to which these differences are appropriate,” Sylvia said.
The Central Bank will follow up the issues identified with individual firms and the key findings include:
- Increases in the average cost per claim of approximately 8% in private motor, approximately 27% in employer liability and approximately 8% in public liability have been observed from year end 2012 to year end 2014;
- Increases have been observed in private motor injury claims frequency from year end 2013 to year end 2014 in the range of 4% to 12%, with an average of 8.3%;
- The number of claims building up within claims systems is increasing for a number of insurers, as their claims are taking longer to settle fully across private motor and liability lines. The slowdown in settlement rates has been observed in some companies to a varying degree. For some companies higher caseloads per handler have also been observed; and
- Optimistic assumptions are being made in relation to the potential impact of Period Payment Orders by some companies and there is a wide variation in reserving methods applied.
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