Irish motor insurers are seeing the cost of claims climb again, with the average claim per policy rising 10% to €424 last year as inflation and court-related expenses pushed up damage and personal injury bills, according to Central Bank of Ireland data.
Irish motor insurers face rising claims costs
The jump matters because it threatens to unwind some of the pricing relief insurers had gained from reform efforts aimed at curbing awards and speeding up claims. Insurance Ireland said the benefits of those changes are being “eroded by excessive legal costs,” underscoring how litigation, rather than compensation alone, is now a major driver of the sector’s expense burden.
Sentiment Indicators
Damage claims cost an average €197 per policy, up 6% year on year and almost double 2019 levels, reflecting higher labour and spare-parts costs as well as the growing complexity of modern vehicles. Personal injury claims are expected to average €228 per policy in 2025, up 14% on the year, even as they remain broadly back to pre-pandemic levels.
For motorists, the figures point to a market where premiums may have peaked but pricing pressure has not disappeared. The average premium per policy rose 4% to €655 last year, bringing the increase since 2022 to 18%, though the central bank said premiums began falling in the second half of last year and that consumer-price data show insurance prices continuing to ease into 2026.
The bigger concern for insurers is the economics of how claims are resolved. For claims under €100,000, which account for 94% of cases, the average litigated award was €19,600, slightly below the €19,734 average from the less costly Injuries Resolution Board, but legal costs in litigated cases averaged €19,902 — more than the compensation itself. By comparison, IRB legal costs averaged just €791.
That gap helps explain the industry’s push for more claims to be routed away from the courts. The central bank said personal injury guidelines introduced in 2021 have reduced awards for standard claims, but insurers now expect more exceptionally large claims and more claimants going to court, which would lift legal costs further.
The sector is still profitable, but the margin is thin. Irish motor insurers made net profit of €89 million last year, equal to 5.7% of gross earned premiums of €1.54 billion, with underwriting helped by premiums exceeding claims costs and investment income.
Investors will watch whether falling premium inflation can offset the persistent rise in claim severity and legal expense. If court awards and litigation costs keep climbing, the reform story in Irish motor insurance could remain more about cost containment than margin expansion.
| Entity | Gains | Losses |
|---|---|---|
| Irish motor insurers | ▲higher premiums | ▼legal-cost inflation |
| Motorists/policyholders | ▲easing premium trend | ▼higher claim-driven pricing |
| Irish government/reformers | ▲lower standard awards | ▼slower reform benefits |
| Lawyers/court system | ▲more litigation demand | ▼pressure to shift claims to IRB |
