Profits from car insurance jump 38% as claims decline
PROFITS ACROSS the insurance industry fell marginally in 2007, though profits from motor insurance jumped 38 per cent as the cost of claims declined.
Motor insurance companies recorded profits of €357.3 million in 2007 - an increase from €258.7 million the previous year - as the cost of claims fell to €889.4 million from €1.037 billion, according to the Insurance Statistical Review, the annual report on the industry previously known as the Blue Book, published by the Irish Financial Services Regulatory Authority.
FBD made the largest underwriting profit from motor insurance earning €118.2 million, followed by Quinn Insurance, with €79.7 million and Hibernian with €65 million. Zurich (formerly Eagle Star) made €19.7 million in 2007, AIG Ireland €9.1 million and Allianz €8.3 million.
The value of the overall insurance industry, which is gauged by premium income, rose 22 per cent to €46.2 billion, but underwriting profit fell 1.9 per cent to €704 million from €718 million.
Irish-authorised companies made €591.9 million of the profit, while companies sanctioned overseas made €112 million.
Life assurance business rose sharply in 2007, while the non-life side of the industry, which includes motor, property and liability insurance, recorded marginal premium growth.
Premiums generated by life assurance firms rose 27 per cent to €38.6 billion. Non-life companies increased premium income by 1.4 per cent to €7.56 billion, though the Irish share of the risk fell by 4 per cent to just over €4 billion.
Investment income fell 5.6 per cent to €369 million due to the falling value of shares last year.
Motor insurance accounted for 38.9 per cent of the market, down slightly on 2006, while liability insurance fell slightly to 19.7 per cent. Fire and property damage accounted for 25 per cent.
The accident and insurance market earned €28.4 million, after losing €2 million in 2006.
Canice O'Reilly, president of the Irish Brokers Association, said insurers had been making "very good profits" in recent years, enabling them to release "substantial" sums from reserves as claims costs had been less than expected due to fewer fraudulent cases and lower pay-outs on injury claims cases.
Claims fell 60 per cent over the past four years and more recently some insurers had been selling insurance below the cost of the risk. He expects premiums to rise.
Axa paid €280 million in dividends to its parent company in 2007. It did not make any dividend payment the previous year. Allianz paid €190 million, a marginal increase on the previous year. Hibernian paid €252 million to its parent company, Aviva, in 2007, down from €260 million. Quinn Insurance paid a dividend of €135 million, down from €175 million.