Liability insurance to cost more as claims rise

A sharp rise in insurance claims arising out of workplace accidents is expected to result in increases in the cost of liability insurance next year.

Launching the Insurance Industry Federation (IIF) 1997 Factfile yesterday, IIF president Mr Adrian Daly said that underwriting results in the liability and motor insurance markets were disimproving. Some price increases have already been announced for motor insurance but there has not yet been any hardening of rates in the liability market, he said.

Employer liability - insurance covering workplace accidents and diseases - gave the most cause for concern, IIF chief executive Mr Mike Kemp explained. There was a poor record of workplace safety, more people at work and a greater propensity to sue, he said.

Companies have seen a big increase in claims covering "occupational diseases" such as deafness and asbestosis, according to Mr Kemp.

Total employer liability claims have risen for four consecutive years from 7,343 in 1993 to 9,758 in 1997. The aggregate industry figures show that the underwriting loss of the 24 general insurers operating in the market rose to £184 million in 1997 from £145 million in 1996.

Asked about the controversy with former insurance ombudsman, Ms Paulyn Marrinan-Quinn, Mr Daly accepted that it had damaged the image of the industry. But he was adamant that the Ombudsman scheme was a good one, adding that the industry was convinced that a voluntary scheme would work better than a statutory scheme and that the Irish system compared favourably with schemes in other businesses and in other countries. He referred to the dispute as "a storm in a teacup". The IIF is "interested" in seeing if the scheme, which only covers disputes between insurance companies and their customers, can be extended to examine advice given to customers by independent insurance brokers and agents, Mr Daly said.

IIF was reviewing its voluntary code of practice to tighten up in the area of insurance sales and to ensure that "churning" was stamped out, he said. And it is working with the Department of Enterprise Trade and Employment on the possible strengthening of the 1989 Insurance Act to give legal backing to voluntary codes of practice.

The 1997 figures show that insurance companies generated total premium income of £4,030 million for the year, an increase of 20 per cent.

Gross premium income generated by the 21 companies operating in the life assurance market was 28 per cent higher at £2,576 million. Premium income from general business was just over seven per cent ahead at £1,454 million.

Gross claims increased by 8 per cent to £2,599 million with a 9.3 per cent rise in claims in the general business to £1,265 million and a 7 per cent rise to £1,334 million in the life business.

Total assets of insurance companies increased by almost 32 per cent to an estimated £26.4 billion in 1997, helped by a strong cash flow and asset appreciation in buoyant markets.

Life companies had assets of £20 billion, up from £15.2 billion while non-life companies' assets were estimated at £6.4 billion, up from an estimated £4.8 billion.

Just over 75 per cent of life company assets, or £15.07 billion, was invested in Ireland. Some £6.33 million or 42 per cent was invested in equities, with 37 per cent in Government bonds, 9 per cent in property and the remaining £1.88 billion in cash and other investments.

The Factfile shows that 10,100 people were employed in the industry, some 5,500 in the life assurance business and 4,600 in general insurance. Total employment was down from 10,231 in 1996.