FBD expects lower premium income from Irish non-life insurance market

INSURANCE COMPANY FBD has said premium income from the Irish non-life insurance market in 2009 is “likely” to be lower than last year “unless rate increases across the market accelerate”.

The country’s third-largest insurer said at its annual meeting that premiums “began to harden” in the last quarter of 2008 and that this had continued this year.

Chief executive Andrew Langford said rival insurers were still selling products at uneconomic rates “but not at the level it was”. “Certain products have probably been written at a loss,” he said.

He said that the insurance market was down 5 to 10 per cent.

Claims had risen 10 to 15 per cent due to the recession as customers filed more claims relating to minor accidental damage.

“Our detection rate on fraudulent claims has gone up quite sharply in the last six months,” he said, amid a general rise in claims.

“Further premium increases are required to provide the industry with an adequate return on capital,” the company said.

The firm will seek to cut costs further to cover higher claims.

FBD is reducing its number of offices from 47 to 34 “in response to changing customer behaviour”.

The company has set up a centralised distribution centre in Mullingar, which employs 170 people.

It is selling more than 40 per cent of its new business online.

Branch closures are likely to lead to 120 people leaving FBD, chairman Michael Berkery said.

“The company has to find new ways to do its business,” Mr Berkery said.

He added that further cost-cutting would allow the insurer to offer customers “very competitive rates”.

Mr Langford said FBD had invested €116 million in Irish and German government bonds in the last six weeks out of total investable assets of €800 million.

A total of €600 million is in government bonds as FBD has moved away from equities and property.

FBD fell 4.5 per cent to €5.90, down 19 per cent this year.