LATEST figures from the Irish Insurance Industry suggest that any reductions last year in the cost of motor insurance are not likely to be repeated this year or in 1997.

Instead, some policies could go up by as much as 10 per cent, mirroring the 10 per cent increase in the number of new claims notified to its member companies during 1995, i.e., 145,600 with members incurring underwriting losses of £39.2 million. So far, motor accident rates during 1996 appear to be even higher, which IIF president, Mr Sean Hehir, describes as a "worrying trend".

According to the IIF's latest Fact File, storm damage during 1995 (remember the Galway floods and the Christmas freeze) has resulted in property underwriting losses of £12 million, following profits of £19 million in 1994. This area of underwriting is notoriously cyclical, however, and there are no indications so far that 1996 will be anything but a benign year for property insurers.

The biggest losses in 1995 - £47.5 million - were incurred by public and employer liability insurers, overtaking motor insurance losses despite the fact that the motor market is three times larger.

Despite efforts by the IIF, the Health and Safety Authority and others to promote safer driving, the number and cost of motor insurance claims continues upward, says the IIF, which is now waiting for a major report from Deloitte & Touche on the factors behind the high cost of insurance "in the hope it will contain meaningful proposals on ways to reduce claims costs and improve the operating environment for insurance companies".

Meanwhile, life insurers increased their premium income by just under 4 per cent to £1.66 billion in 1995, though claims increased by 17.6 per cent to £1.29 billion. Total life assurance company assets increased in value by 12 per cent in 1995 to £12.91 billion. Some 75 per cent of this total is invested in gilts and equities but this level of investment, says the IIF, is being hampered by the bias endemic in the savings market against risk oriented investments.

The IIF has called for the introduction of British style Personal Equity Plan investments (PEPs), which are tax deductible on condition that they are held for a minimum period of time.

"Such a product would increase the supply of funds to the Irish equity market," says Mr Hehir, "and would also support any measure taken to encourage new enterprises coming to the stock market in search of equity capital".