Car insurance premiums up 4% last year, says Central Bank

Car insurance premiums increased by 4% to €655 in 2025, according to research from the Central Bank of Ireland. This rise is primarily driven by damage claims, which now account for 32% of premiums received, up from 26% in 2022. However, the report shows an encouraging trend in the final quarter of 2025, with premiums falling by 0.4% between the first and second halves of the year.

The cost per policy for damage claims reached its highest figure ever at €197 in 2025, up almost double (96%) from the 2015-2019 average. Personal injury claims, once the most expensive element, have been decreasing in recent years, with average compensation falling by 13% compared to 2019 and the number of claims down by 20%. The Personal Injuries Guidelines, implemented in 2004, have been a key factor in stabilizing the market.

While average compensation costs for litigated claims have fallen, legal costs for these claims remain high, accounting for almost half of the total cost of litigated claims under €100,000. Insurers are facing significant pressures due to vehicle repair costs, replacement parts, materials, and broader inflationary and supply-chain challenges.

The Alliance for Insurance Reform expressed disappointment over the 4% premium increase but welcomed recent reductions and signs that vehicle repair costs may be easing.