Behind the Data – The Cost of Car Insurance in Ireland
Fiona Bent*
October 2026
Car insurance occupies a unique position in the financial lives of Irish motorists. It is not a discretionary purchase but a legal mandate—a requirement as fundamental as having a valid driving licence. This mandatory status means that when insurance costs fluctuate, they directly impact household budgets across the country, making transparency about pricing movements essential. This Behind the Data addresses some common questions that drivers and policymakers have about the cost of car insurance, increasing transparency around the impact that various factors have on premiums.
The Data
This report has been prepared using the data from the National Claims Information Database – Private Motor Insurance Report 8. Data was collected from all insurers selling private motor insurance in Ireland and includes premiums, policy numbers, claim costs, claim settlements and income and expenditure statements.
These data are collected on different bases, i.e. accident year (the year in which a claim occurred), financial year (the insurer’s year of account), and settled year (the year a claim was settled). In order to undertake a meaningful analysis, data on different bases has been combined, applying assumptions and simplifications as necessary to draw conclusions.
While the NCID data forms the main basis of my analysis, I have also been informed by other data sources, including inflation data from the CSO and injury award data from the Injuries Resolution Board.
How much does car insurance cost in Ireland?
In 2025 the average cost of a car insurance policy in Ireland was €654, a 4% increase from 2024. 2.3m policies were sold in the year, and the vast majority (93%) provided comprehensive cover for own vehicle damage as well as third party liability.
The price of car insurance typically follows a cyclical pattern. In Ireland, premiums reached a peak in 2017 at an average of €721 per policy. They then reduced 23% to €557 in 2022. They have been on the rise since then, increasing 16% from 2022 to 2025.
Trends in insurance premium are primarily driven by insurers’ estimate of their costs, as well as other sources of income (i.e. investment income) and the level of competition in the market. Some costs will be driven by inflation – such as damage claims, staff wages and overheads – but others are driven by different forces – such as injury claims, which are largely determined by guideline award tables.
Chart 2 shows how changes in the cost of car insurance can be very different to changes in the cost of other goods and services. Inflation was clearly not a driver of changes in car insurance premium between 2011 and 2022. The increase in premiums in years 2014 to 2017 was mostly driven by an increase in injury claim costs. However, since 2022 inflation has had a direct impact on the cost of car repairs, resulting in a knock-on increase in premiums starting in 2023.
Where does my premium go?
Premium is an insurer’s main source of income. Whilst they may earn some investment income, premiums have accounted for more than 90% of insurers’ income for the last 10 years. For the sake of simplicity, we have ignored all income other than premium and all expenses related to non-insurance activity (e.g. interest payments on loans) in undertaking this analysis.
Insurance premium is used to cover an insurer’s expenses, which can be split into two broad categories: 1) the cost of paying claims; and 2) the cost of running the business. Anything left over forms part of the insurer’s profit.
Claim costs
Claim costs are the biggest expense for an insurer, equivalent to 60% of premium in 2025.
Damage Claims are the costs related to paying claims for damage to vehicles - either own damage or third party.
Injury compensation is the cost of paying awards to claimants who are injured in a crash. It does not include associated costs of settling these claims - legal and other costs are accounted for separately.
Legal costs are also related to settling injury claims, and include fees to solicitors, and other expenses associated with litigation. These include the insurers' own legal costs and the legal costs of the claimant (if they are covered by the insurer).
Other claim costs are also related to settling injury claims and include things like medical reports used to assess injuries.
Business Expenses
As well as paying claims, insurers have certain overheads that they need to pay in order to provide car insurance. These made up 36% of premium in 2025.
Operational expenses include staff and management wages, building costs, software licences and fees to service providers (e.g. claims handlers).
Broker commissions are fees paid to brokers to pay for their services. Note that not all car insurance is sold through brokers. The cost of broker commission here is averaged across direct and broker business.
Reinsurance is insurance for insurers. It protects them against very large claims and allows them to write more business than they would otherwise be able to. This is the net cost - the amount paid to reinsurers minus the amount received back.
MIBI stands for the Motor Insurers' Bureau of Ireland. Car insurance premiums include a levy paid to MIBI to maintain a fund that helps people hit by uninsured or unknown drivers.
Underwriting Result
Underwriting Result is the amount of premium insurers have left over after paying their insurance-related costs. It contributes to the insurers' profit/loss.
How have claim costs changed following policy reforms?
Personal Injuries Guidelines
The Personal Injuries Guidelines redefined the amount of compensation to be awarded for different types of injury, with a general shift toward lower awards. They went live in April 2021 and started to be implemented in earnest in 2022. Following their implementation two changes have been observed in injury claims: average compensation has fallen by 13% compared to 2019; and the number of claims has fallen by 20%.
Injuries Resolution Board
Circa two thirds of all motor injury claims are referred to the Injuries Resolution Board (IRB) for assessment. The IRB recommends a compensation amount with reference to the Personal Injuries Guidelines. The award must be accepted by both parties (the insurer and the claimant) – if either party rejects the claim, they have the option to settle directly between them or refer the claim on to the courts for assessment.
Sometimes claimants need or want legal representation when making an injury claim against an insurer. Insurers will also require legal representation if the claim goes to litigation. Insurers pay their own legal costs and often cover the claimant’s costs too, particularly when settling through litigation. These can represent a significant proportion of the overall claim cost and are not impacted by the Personal Injuries Guidelines reforms.
The legal costs for claims that go to litigation are substantially higher than those settled either via direct settlement or the IRB. Considering smaller claims (<€100,000) settled in 2025, the average legal costs were €20,000 in the litigated channel versus €2,300 in the direct channel and only €800 in the IRB.
In 2022 the IRB was given an increased mandate to mediate claim settlement where the two parties to a claim do not agree. This policy reform was an effort to reduce legal fees, feeding through to lower claim costs and ultimately lower premiums. However, acceptance of IRB awards has not substantially increased. Litigation continues to be a popular avenue to settle injury claims, with circa 35% of injury claims setting this way every year since 2017.
Table 1: IRB award acceptance rates for motor injury claims.
Source: IRB 2025 Annual Report
Overall Claim Costs
Historically, injury claims have been the most expensive element of car insurance costs and a key driver of premium prices. However, this has changed in recent years, with damage claims increasing from one third of total claim costs pre-Covid to almost half of claim costs in 2025.
This change has been driven by two factors – policy reform, which aimed to reduce the cost of injury claims; and inflation, which has substantially increased the cost of damage claims.
In 2025 insurers expect their claim costs per policy to be higher than in any other year in the NCID dataset. The average claim cost per policy from 2022 to 2025 was 27% higher than it was in 2019.
This is largely driven by damage claims which have nearly doubled in cost since 2019.
The inflation in vehicle damage claim costs is driven by a number of factors, including:
- Shortage of spare parts due to global supply-chain issues
- Rising complexity of vehicles, particularly “smart” technology
- Longer timeline to repair, and the cost of car hire in that period
- Higher cost of labour
Motor insurers have also expressed concerns that injury claim costs are rising again. While the Personal Injury Guidelines have been effective in reducing awards for standard claims, insurers now expect an increase in the number of exceptionally large claims, and in the number of claimants going to court, driving up legal costs. This can be seen in the reserves insurers have set aside for claims not yet settled.
How have legal costs changed over time?
The average cost of legal fees incurred when settling injury claims has been steadily increasing over the last 10 years. In the last 5 years alone, they have increased by 20%, and in 2025 legal fees constituted an additional cost of €12,000 per injury claim settled. This erodes some of the reduction in claim costs achieved by the Personal Injury Guidelines. The average cost of settling an injury claim was €39,000 between 2018 and 2021. Between 2022 and 2025 this averaged €38,000, only a 3% reduction (compared to an 11% reduction in compensation awards).
While the legal costs per claim are increasing, the cost per policy has been reducing. Legal costs were on average €57 per policy in 2025. This is 17% lower than it was in 2015, which is largely due to a reduction in the number of injury claims. I note, however, that the legal costs per policy have been rising again in 2024 and 2025.
Whilst legal costs typically represent 9% of a premium, they can often be reduced or avoided altogether. Legal representation is not generally required when submitting a claim to an insurer, and formal litigation is not usually necessary. Even in cases of disagreement with an insurer's offer, the IRB can mediate the dispute to reach a mutually acceptable resolution, eliminating the need for costly legal proceedings.
How have insurers’ profits changed over time?
The main objective of any business is to earn a profit, and insurance companies are no exception. In 2025 insurers earned €119m profit (before interest and tax) on car insurance. This represented a 7% margin on their total income. They earn this profit from a combination of surplus premium (i.e. the amount of your premium left over after paying their claims and expenses) and investment income.
As it can take a number of years to settle car insurance claims, this profit is influenced by both the policies sold in the year and claims on policies sold in previous years. It is therefore helpful to look at profit over a longer timeframe.
Table 2: Profit on car insurance as a percentage of insurers’ total income, broken down into the contribution from insurance activities and investment activities.