The cost of motor insurance is soaring again due to the rising cost of car repairs, industry sources claim.

Premiums are up by 11.4% on average in the year to December, new figures from the Central Statistics Office show, sometimes adding hundreds of euro to cover renewal costs.

A spokesman for Insurance Ireland, which represents the industry, said: “While motor insurance premiums had been declining for a number of years, we are starting to see the impact of significant inflation in the cost of repairs, increased volumes of damage claims, and the significant increase number of collisions on our roads.

“It is the case globally that the cost of insurance has been increasing, reflecting the impact of inflation; however, consumers in Ireland were cushioned from the full impact of inflation in the Irish insurance market because of the government’s insurance reform agenda, which is having a positive impact.”

Another industry source said: “The cost of repairs has gone up significantly as a consequence of inflation and the cost of repairs for electric vehicles in particular as more EVs come into the nationwide fleet...

“Cars also have more technology in them now [so] it is harder to repair them.

“And again from the industry, labour supply.

“There is a shortage of the old-style panel beater, a shortage of skills.”

However, the industry body claimed average premiums in Ireland are now lower than in Britain.

The spokesman added: “Irish motor insurance customers benefited from significant decreases from 2017 to 2023.”

Figures from the Central Statistics Office (CSO) show premiums for motor insurance have been increasing due to inflationary pressures.

The number of road accidents involving “material damage” is up by more than 20,000, from 27,085 to 48,843, over ten years, the latest figures from the Road Safety Authority (RSA) show, with an estimated 2.8m cars now on the road.

The Alliance for Insurance Reform (AIF) said that while the cost of injury claims has fallen after the reformed personal injury guidelines of 2021, the cost of repairs has “gone up significantly”.

Brian Hanley, of the AIF, added: “We are now in a period of sustained premium increases.

“This has been largely caused by significant inflation in the cost of parts and labour.

“General inflation seems to be coming under control now so hopefully this will also bear out in the cost of motor parts, etc, and ultimately be reflected in premium stabilisation in the very near future.”

A lack of competition in the market is also to blame, Mr Hanley added, remarking: “There was pressure on prices for a few years.

“Over four or five years it came down about 25% but that has stopped, but I think that now inflation generally has begun to settle.”

Home insurance is also on the rise, up 8.3% in the year to December.

The Insurance Ireland spokesman said: “Increases in home insurance reflect the significant inflation in the cost of construction, repairs, and increases in house values.”

Junior minister Trade Dara Calleary, who was involved in the Government’s recent reform of the industry, said: “I am concerned about the rise in insurance given the level of reform in the insurance area.

“What we are seeking to do is bring in more competition to give Irish drivers further choice in the car insurance market.”

He said the reforms to the market “make it more attractive to set up an insurance business”.

The changes include certainty over the level of payouts from companies considering entering the market.

“It brings a lot more transparency to the market as well for the consumer and for business,” Mr Calleary added.