The Daily Star Ireland
Insurance companies have once again been urged by the Government to transfer savings from major sector reforms to policyholders. This request coincides with the announcement that the Irish branch of Axa will pay a €70 million dividend to its French parent company this year following substantial profits in 2023.
Axa Insurance DAC’s financial records reveal that after-tax profits in Ireland surged from €23.7 million to €94.5 million in 2023. The 2024 dividend is consistent with the €70 million paid to France in 2023.
Significant legislative changes and adjustments to injury award levels have benefited insurers. Despite these reforms, motor insurance premiums are increasing at a rate 15 times higher than general inflation, with home and health insurance premiums also rising sharply.
Insurers attribute the rising premiums to more claims and higher costs associated with settling these claims, particularly in litigated cases. Neale Richmond, the junior minister responsible for Financial Services, Credit Unions, and Insurance, has met with insurance companies for a second time since the summer, following an earlier meeting where he urged them to pass on savings to policyholders.
Finance Minister Jack Chambers stated that in the latest meeting, Richmond emphasized the necessity of reducing premiums and expanding risk appetite due to the reform agenda. Chambers noted that the insurers responded positively about expanding product lines, improving risk appetite, and implementing government reforms.
Motor insurance premiums have been increasing for 14 consecutive months, with the cost of insuring a vehicle up by 11% in the year to October, according to the Central Statistics Office (CSO). Home insurance rates have risen by 7.6%.
These increases come despite reforms that benefit the insurance industry, such as reduced payout recommendations, enhancements to the Injuries Resolution Board, and adjustments to duty-of-care legislation for businesses.
Chambers reported progress on the Government’s Action Plan for Insurance Reform, noting the entry of new insurers into the Irish market. He mentioned new entrants like OUTsurance, Revolut, and Fastnet, which are providing more choices and competition for consumers. Fastnet is an IFSC-based underwriter selling policies through brokers in Ireland.
Chambers highlighted a 40% reduction in premiums since December 2016 in Ireland, compared to a 20% increase across the euro area. When asked why policyholders haven’t seen greater reductions in premiums, industry body Insurance Ireland pointed to high legal costs in the claims environment.
Insurance Ireland argued that the notion of insurers “ripping off” policyholders is unfounded, noting that in 2023, insurers incurred a 1% loss on current-year claims. The group called on all political parties to help policyholders benefit fully from recent reforms by addressing high legal costs and the preference for litigated claims.
The Central Bank’s latest motor insurance report showed that legal costs constitute nearly half of claim costs, with 46% of the total cost for litigated claims settled for less than €100,000 in 2023. The average legal costs were 89% of the compensation amount in litigated claims, meaning lawyers received €0.89 for every €1 paid in compensation.
Insurance Ireland expressed concern over the rising legal costs, which increased by 18% compared to the 2015-2019 average before the Government’s Insurance Reform Agenda. Additionally, the group highlighted an increase in fatal and serious collisions over the past three years, with the Road Safety Authority reporting nearly a 40% rise in fatal collisions on Irish roads. These collisions have a devastating impact on families and communities and also contribute to higher insurance costs.
