Davy has hiked its pre-tax profit forecast for FBD by 70 per cent for next year as the insurer continues to turn around its business and raise coverage rates.

The move comes after Ireland’s only publicly-quoted insurer reported earlier this month that its first-half loss narrowed by 96 per cent to €3.65 million as it hiked premiums by an average 7 per cent and avoided having to set aside further reserves for claims from previous years.

The company, which aims to return to underwriting insurance at a profit by the end of this year, having been loss-making since 2014, may post a full-year pretax loss of €157,000 for 2016, according to Davy. FBD reported a €85 million last year.

Davy now sees FBD turning in a pre-tax profit of €16.1 million next year, up 70 per cent from its previous estimate, before earnings almost double the in 2018 to €30.6 million.

More cars

Motor claims have soared in recent years as more cars take to the roads in a recovering economy, court awards have been increasing, and insurers have been less able to rely on investment income to cushion the blow, as they grapple with record-low global bond yields.

The Government and various industry initiatives are under way to identify and tackle the cause of insurance claims and cost inflation.

FBD chief executive Fiona Muldoon has said that the Personal Injuries Assessment Board legislation needs to be strengthened in the first instance to give PIAB powers to compel co-operation from both sides of a claim "so that every settlement is not adversarial, with two sets of lawyers and two sets of experts".