Insurers in motor area cut losses by 42% - report
Insurance companies have reported a substantial fall in losses sustained on motor insurance last year with the industry's total underwriting costs down by 42 per cent from €323 million to €186 million.
The 2001 Insurance Annual Report, known as the Blue Book, shows a much worse position on public and employers' liability business, with losses up from €133 million to €165 million, signalling further premium hikes in 2003.
According to the figures, which are compiled by the Department of Enterprise, Trade and Employment, Hibernian incurred the largest underwriting loss on motor insurance last year at €68.1 million.
Axa, the Republic's largest motor insurer, sustained underwriting losses of €28.7 million, with Royal & Sun Alliance recording losses of €27.9 million.
The cost of motor claims for the year is reported at €1.4 billion, with the industry reporting a total loss of €12.7 million on this class of insurance in 2001 - a year when all motorists were forced to pay much higher premiums to cover the increased cost of claims.
Mr Martin Long, a spokesman for the Irish Insurance Federation (IIF), said the improvement in underwriting losses was due to the collection of higher premiums and stressed that motor insurance remained an unprofitable business for insurers.
"We welcome any decrease in underwriting losses but the industry is still making a loss and a high level of premiums will have to continue."
The underwriting losses on liability insurance rose from €133 million in 2000 to €165 million in 2001. According to the report, the insurance industry recorded an overall loss of €75 million on this business, which suggests that businesses are facing a severe increase in already very expensive insurance cover.
Losses relating to fire and property insurance also climbed, largely due to bad weather, increasing from €25 million to €67 million. The industry has recorded a total trading loss of €22.6 million for 2001.
Mr Long highlighted the high legal costs involved in paying out claims as one of the primary reasons for the climbing losses. Some 40 per cent of the money paid out in motor insurance claims is for legal costs, while in liability claims this rises to 56 per cent, according to the IIF.
The sector was also hit by the weak performance of equity markets, where customers' premiums are invested.
The Tánaiste, Ms Harney, has announced a fundamental reform of the industry, which includes the implementation of 67 recommendations contained in the Motor Insurance Advisory Board report. A Personal Injuries Assessment Board has been established on an interim basis and legislation is being finalised to put it on a statutory footing.
The Competition Authority is also carrying out an inquiry into the sector as part of the effort to reduce punitive insurance costs in the Republic.
The report shows that the total amount of Irish risk business increased by 22 per cent to €2.81 billion, while foreign risk increased by 14 per cent to €1.9 billion.
The net underwriting result for Irish risk business improved on the 2000 result, with a loss of €390 million compared to €453 million in 2000.
Allowing for investment income, the loss for 2001 was €73 million compared to €161 million in the previous year.
In terms of life assurance, the sector showed an increase of 2 per cent in new premiums written from €10.9 billion to €11.2 billion.
Overall the sector received total premium income of €18.9 billion, up 7 per cent on 2000.