Cost of accidents cuts insurance sector returns

The spiralling cost of road accidents has contributed to a sharp increase in insurance claims and continues to depress insurance sector returns.

The Insurance Annual Report for 1997 shows a sharp rise in underwriting losses in the motor insurance sector, with losses up from £90 million 1996 to £114 million last year.

Investment income earned during the 12-month period helped to boost the underlying result, however, to yield a technical profit of £31 million, similar to that achieved in 1996.

Total premium income on non-life insurance increased by 9 per cent to £1.3 billion in 1997, but the cost of claims rose at a faster rate, climbing by 11 per cent to £1.2 billion.

Underwriting losses on liability insurance increased from £64 million to £80 million.

In fire and property insurances, underwriting losses increased slightly from £1 million to £1.6 million.

Overall, the total Irish risk underwriting losses increased from £136 million to £184 million. When investment returns are taken into account the total underwriting business managed to show a profit of £74 million, down from £78 million in the previous year.

In the life assurance sector, total new premiums increased by 58 per cent from £1.3 billion to £2.1 billion.

New single premium business increased by 67 per cent, while new annual premium income rose by 27 per cent over the 12 months.

Total gross premium income in 1997 increased by 33 per cent from £2.48 billion to £3.29 billion.

The report also shows a continuing rise in the number of insurance companies locating at Dublin's International Financial Services Centre.

At the end of 1997, there were 58 direct non-life insurers and 14 life assurance companies operating at the IFSC.

Commenting in the report yesterday, the Minister of State for Science, Technology and Commerce, Mr Noel Treacy, said Dublin was now established as one of the top 10 domiciles in the world for captive insurance companies.

To date these include, BMW, Ericsson and Coca Cola.