Ireland's efforts to reduce motor insurance costs have delivered measurable reductions in personal injury awards. Yet despite years of reform, affordability remains a stubborn challenge.
New analysis from the Society of Actuaries in Ireland found that third-party motor injury claims costs remain more than 50% higher than in the UK despite the introduction of the Personal Injuries Guidelines (PIGs) in 2021. While compensation costs have fallen, legal expenses and other claims-related costs continue to exert pressure on insurers and customers alike.
The findings point to a market where multiple cost pressures are operating simultaneously, according to Keith Morrison, Ireland P&C Leader at WTW, noting the impact of inflation in damage claims, rising legal costs and ongoing uncertainty around the application of the Personal Injuries Guidelines.
"The Irish motor insurance market continues to be constrained in its ability to reduce the cost of insurance for customers," he said.
The latest data suggests the Personal Injuries Guidelines have materially altered the claims landscape.
According to the Society of Actuaries, compensation costs for settled third-party injury claims below €100,000 fell by 23% between 2020 and 2024. However, legal and other expenses increased by 22% over the same period, reducing the overall impact on total settlement costs.
"There have been significant reductions in median awards as reported in the Injury Resolution Board reports across all motor and liability classes," Morrison said.
Morrison argued that claims costs would be significantly higher today had the industry remained under the previous Book of Quantum framework. The figures suggest that lower compensation awards have helped contain claims inflation, but they have not been the only factor shaping the overall cost of motor insurance.
One of the clearest themes emerging from the report is the continuing role of legal expenses. The Society of Actuaries found that legal fees on lower-value third-party injury claims remain substantially higher in Ireland than in the UK. Legal costs are also accounting for an increasing share of overall claims expenditure.
"Legal costs are becoming an increasing percentage of claim costs, with legal fees in many cases now accounting for over 40% of the total costs for litigated claims," Morrison said.
He also pointed to longer court delays, noting that average delays are now more than a year longer than before 2020. The Government's Action Plan for Insurance Reform includes measures aimed at legal costs, though many remain some way from implementation.
While injury awards have dominated much of the policy discussion in recent years, the latest findings suggest insurers are facing a broader range of cost pressures. Damage claims now account for more than 50% of total motor claims costs, compared with approximately 30% before 2021, according to figures cited by Morrison.
The shift reflects wider developments across the motor market, including increasingly sophisticated vehicle technology, rising repair costs, labour shortages and higher parts costs. Morrison also highlighted the impact of inflation on special damages, particularly costs relating to care and loss of earnings.
The trends point to a market managing multiple sources of claims inflation simultaneously rather than focusing solely on compensation awards. That may help explain why reductions in injury awards have not fully resolved concerns around affordability.
The Society of Actuaries' findings show that Irish injury claims costs remain significantly higher than those seen in the UK. They also suggest that the conversation around insurance affordability is broadening.
The debate is increasingly extending beyond compensation awards to encompass legal expenses, repair inflation and the growing cost of vehicle damage claims. As policymakers continue to pursue insurance reform, the challenge may be ensuring that efforts to improve affordability keep pace with the changing drivers of claims costs.
"Within any change there is the balance to be struck between the cost of insurance and the level of compensation for pain and suffering," Morrison said.
The Personal Injuries Guidelines have changed the compensation landscape. The next challenge may be determining whether the industry's other cost pressures can be addressed with the same degree of success.
