- Report provides key statistics on employers’ liability, public liability, and commercial property insurance in Ireland; including data on claims costs and settlement channels.
- On average, employers’ liability and public liability claims settled through litigation cost more and take longer to settle than claims settled directly or via the PIAB.
- Insurers’ income and expenditure on Employers’ Liability, Public Liability, and Commercial Property insurance shows an operating loss of 11% of total income in 2020.
The Central Bank of Ireland has today (22 June 2022) published the second annual Employers’ Liability, Public Liability and Commercial Property Insurance Report of the National Claims Information Database (NCID).
This report follows the first annual Report, which was published in July 2021, and publication of reports of the NCID on Private Motor Insurance. The data produced relates to premiums and income, claims and expenses, and settlement costs.
The key findings are as follows:
Settlement of Employers’ Liability and Public Liability Claims:
- On average, Employers’ Liability and Public Liability claims settled through litigation cost more and take longer to settle than claims settled directly with the insurer or through the Personal Injuries Assessment Board (PIAB).
- For injury claim settlements where the total cost of settlement is less than €150k (comprising 93% of claimants), the average compensation costs are relatively similar for claims settled through PIAB and litigation. However, the average legal fees for claims settled through litigation are significantly higher.
- Injury claims represent the largest number of claims and costs for Employers’ Liability and Public Liability insurance. Between 2015 and 2020, these claims represented 68% of claimants and 92% of settlement costs.
- Litigation was the most common channel for settling Employers’ Liability and Public Liability injury claims, accounting for 58% of injury claimants and 81% of injury costs between 2015 and 2020. This compares with 28% of claimants and 12% of costs for claims settled directly with the insurer, and 14% of claimants and 8% of costs for claims settled via the PIAB.
Profitability of Employers’ Liability, Public Liability, and Commercial Property Insurance:
- Insurers’ income and expenditure on Employers’ Liability, Public Liability, and Commercial Property insurance shows an operating loss of 11% of total income in 2020. This is primarily due to an operating loss of 30% on the commercial property line of business.
- Reinsurance reduced the operating loss by 12% of total income.
- Across all years (2009 to 2020), there has been an operating profit of 3% of total income.
The Report also highlights the following relating to the underlying insurance business (that is, excluding investment income and any other earnings) from 2009 to 2020:
- 73% of gross earned premium has been used to cover claims and expenses related to settling claims. 27% has been used to cover other underwriting expenses.
- The gross cost of claims and underwriting expenses was approximately equal to gross earned premium over the period, leading to a combined operating ratio (COR) of 100% gross of reinsurance. The COR was 108% net of reinsurance.
Employers’ Liability, Public Liability, and Commercial Property Premiums:
- The majority of policies sold (84% in 2020) are package policies, which include a combination of Employers’ Liability, Public Liability, or Commercial Property. For these policies, allowing for the qualification noted below, there was an increase of 2% in average premium from 2019 to 2020.
- This follows a 25% increase over the years 2013 – 2019 and a 17% decrease over the years 2009 – 2013.
It is important to note that liability insurance spans a broad range of business sectors, each of which covers a variety of risks. It is therefore extremely challenging to provide meaningful data on the overall “average” cost of claims or premiums per policy as it may not reflect the reality of a specific sector or the size of its insured business.
Commenting, Mark Cassidy, Director of Economics and Statistics, said: “Today, we have published the second Employers’ Liability, Public Liability, and Commercial Property Insurance Report of the NCID. Today’s report provides information on a number of areas including costs, claims, and settlement channels. It includes data up to the end of the 2020 calendar year, and therefore provides some insights on the impact of the Covid-19 pandemic on these areas of insurance. We can see for example from the data that insurers made a significant operating loss on the Commercial Property line, which contributed to an overall operating loss on Employers’ Liability, Public Liability, and Commercial Property lines.
“The Report also indicates that claims settled through litigation cost more and take longer to settle than those settled directly with the insurer or via the PIAB. This data reflects findings in both the previous report and in reports of the NCID for Motor Insurance. Future reports will provide initial insights on the effect of the Judicial Guidelines. This will be a further important metric to add to the NCID’s role in bringing transparency to the insurance market and in informing the work of the Oireachtas and stakeholders.”
Notes to Editor
The National Claims Information Database is a repository for aggregate claims data. The purpose of the NCID is to increase transparency around the cost of claims. Aggregate data is collected from insurers, including premium and claims data. This allows the Central Bank to publish an annual report containing analysis of the cost of claims, the cost of premiums, how claims are settled, how settlement costs vary depending on how claims are settled, and an analysis of the various types of cost that make up settlements. The current classes of insurance that are in scope of the NCID are Private Motor Insurance, and Employers’ and Public Liability Insurance and Commercial Property.
The Central Bank began collecting data on Employers’ Liability and Public Liability Insurance and Commercial Property Insurance in Q4 2020. This data will continue to be published on a regular basis.
The Personal Injuries Assessment Board (PIAB) is an independent state body that assesses personal injury compensation.
The Cost of Insurance Working Group was established in 2016 to examine the factors contributing to the increasing cost of insurance and to identify measures to reduce this cost, taking account of the requirement to maintain a financially stable insurance sector. The focus of the first phase of its work was on the rising costs of motor insurance, which culminated in the publication of the Cost of Motor Insurance Working Group: Report on the Cost of Motor Insurance in January 2017. Recommendation 11 in this report required the Central Bank of Ireland to establish a National Claims Information Database to improve data availability. Legislation was required to confer this new function on the Central Bank, and the Central Bank (National Claims Information Database) Act 2018 commenced in January 2019. The legislation requires that the Central Bank publishes a report on an annual basis.
Source: CBI Ireland