Dáil Éireann Debate, Wednesday - 1 December 2021
77. Deputy Peadar Tóibín asked the Minister for Finance the level of profit from the insurance sector; the average insurance premium per type of insurance; and the level of payouts for insurance claims from 2016 to 2020 and to date in 2021, in tabular form. [59174/21]
View answerAt the outset, it is important to note that as Minister for Finance, I am responsible for the development of the legal framework governing financial regulation. Neither I, nor my Department, collect the type of information being sought by the Deputy. However, the Central Bank publishes data into the insurance sector via the National Claims Information Database (NCID). To date, the NCID has published three reports on private motor insurance and one report on employer liability (EL), public liability (PL) and commercial property insurance. It should be noted that NCID data in relation to motor insurance currently covers the period 2009-2020, while for employer liability, public liability and commercial property, it covers the period 2009-2019. Therefore, data for 2021 to date is not available.
To be of assistance to the Deputy, my officials consulted the Central Bank and collated the below tables from the NCID reports to provide the information that the Deputy is seeking, as far as it is currently possible. Please note that the Deputy can find this and other data in published Annexes to each of the NCID reports. They are published on the Central Bank of Ireland website (www.centralbank.ie/statistics/data-and-analysis/national-claims-information-database).
Profitability
For the purpose of providing data on the level of profit from the insurance sector, my officials have provided the data in respect of private motor insurance and general liability insurance separately, as per the reports. There are two overall profitability indicators shown in the NCID reports - the operating profit as a percentage of total income and the net combined operating ratio (COR). The COR is a key ratio used by insurers to measure the underlying performance of their insurance related activities. The COR describes insurance related outgoings as a proportion of earned premium. A COR greater than 100% represents a higher level of insurance related outgoings than insurance-related income.
In respect of private motor insurance, the profitability per year going back to 2009 was:
|
Year |
Operating profit or loss as a percentage of total income |
Net Combined Operating Ratio (COR) |
|
2020 |
12% |
79% |
|
2019 |
11% |
81% |
|
2018 |
9% |
87% |
|
2017 |
6% |
94% |
|
2016 |
-4% |
112% |
|
2015 |
-9% |
123% |
|
2014 |
-10% |
123% |
|
2013 |
-20% |
132% |
|
2012 |
11% |
100% |
|
2011 |
7% |
95% |
|
2010 |
6% |
102% |
|
2009 |
3% |
109% |
Source: Table 5 and Figure 18, NCID Private Motor Insurance Report 3
Note: This data is based on data from firms that insured 98% of the private motor insurance market in Ireland in 2020.
For general liability (employer liability/public liability) and commercial property insurance, the profitability over the period 2009 to 2019 was:
|
Year |
Operating profit or loss as a percentage of total income |
Net Combined Operating Profit (COR) |
|
2019 |
3% |
100% |
|
2018 |
-3% |
96% |
|
2017 |
-2% |
110% |
|
2016 |
-12% |
137% |
|
2015 |
-4% |
128% |
|
2014 |
2% |
116% |
|
2013 |
2% |
107% |
|
2012 |
6% |
122% |
|
2011 |
10% |
93% |
|
2010 |
23% |
73% |
|
2009 |
23% |
81% |
Source: Table 13 and Figure 10, NCID Employers’ Liability, Public Liability and Commercial Property Insurance Report 1
Note: This data is based on 83% of the EL, PL and Commercial Property insurance market in 2019.
It should be noted that in respect of private motor insurance, recent profitability in the sector followed a number of years of negative net insurance-related results which falling levels of investment income could not offset fully.
I understand from the Bank that the profitability figures will have an element of 'survivor' bias; they will not include the results of those firms that exited the market in 2019 and prior for private motor insurance, and 2018 and prior for general liability and commercial property insurance.
Average earned premium per policy
For private motor insurance, the average earned premium per policy was:
|
Year |
Private motor: average earned premium per policy (€) |
|
2020 |
622 |
|
2019 |
666 |
|
2018 |
699 |
|
2017 |
689 |
|
2016 |
600 |
Source: Figure 4, NCID Private Motor Insurance Report 3
Note: This data is based on data from firms that insured 99% of the private motor insurance market in Ireland in 2020.
The Bank notes that it is important to stress that calculating an average premium metric that accurately reflects market price movements in liability and commercial insurance markets is very challenging due to changes in the mix of policies, lines of business and sectors as well as changes in the size of policies, policy excesses, limits, risk and covers. These can all significantly impact the average premium so that this may not accurately reflect the change in rate charged per unit of risk by insurers nor may it reflect the average premium experience of insured customers in particular sectors. Therefore while an average premium metric is a crude measure, this metric represents the best currently available indicator of overall average premiums from the data captured.
For general liability (Employer and Public Liability) and commercial property package insurance policies, the average premium per package policy was:
|
Year |
General liability package policies (EL/PL/commercial property): average earned premium per policy (€) |
|
2019 |
2,269 |
|
2018 |
2,173 |
|
2017 |
2,065 |
|
2016 |
2,000 |
Source: Figure 2 (and Annex), NCID Employers’ Liability, Public Liability and Commercial Property Insurance Report 1
Note: This data is based on 86% of the EL, PL and Commercial Property insurance market in 2019.
With regard to employer and public liability data, the Central Bank notes in its Report that package policies represent 86% of EL/PL/commercial property policies, and there is a large spread in the size of policies earned in the EL, PL and commercial property market based on the premium per policy which reflects the large range of policyholders and diverse set of risks which fall under this insurance cover. The Report also notes that from 2009 to 2019, 59% of Package policies and 78% of Standalone policies had a premium of €1,000 or less; 93% of both Package and Standalone policies had a premium of €5,000 or less.
Claims settlement costs
For private motor insurance, the total cost of settled claims by year was:
|
Settled Year |
Private motor: total claims settlement costs (€m) |
|
2020 |
621 |
|
2019 |
639 |
|
2018 |
608 |
|
2017 |
621 |
|
2016 |
588 |
|
2015 |
601 |
Source: Table 8, NCID Private Motor Insurance Report 3
Note: This data based on firms that insured 88% of the private motor insurance market in 2020.
The above includes damage and personal injury claims costs. 90% of claimants made damage claims between 2015 and 2020. Damage claims would seldom require PIAB or court assessment and 99% of them settled directly with the insurer. Injury claims accounted for 10% of claimants and 72% of total settlement costs between 2015 and 2020.
For general liability (Employer and Public Liability) insurance, the total cost of settled claims by year was:
|
Settled Year |
General liability package policies (EL/PL): total claims settlement costs (€m) |
|
2019 |
390 |
|
2018 |
362 |
|
2017 |
375 |
|
2016 |
372 |
|
2015 |
334 |
Source: Table 19, NCID Employers’ Liability, Public Liability and Commercial Property Insurance Report 1
Note: This data is based on 82% of the EL, PL and Commercial Property insurance market in 2019.
The above includes damage and personal injury claims costs. 33% of claimants made damage claims between 2015 and 2019. Injury claims accounted for 67% of claimants and 92% of total settlement costs between 2015 and 2019. EL claims are predominantly injury claims; however, PL claims are a mix of bodily injury and damage.
