The insurance industry enjoyed a 7 per cent increase in net premium income in 1996, compared to the previous year, but the cost of claims rose by 10 per cent. Figures released last night show that net premium income was £1,192 million but the cost of claims rose to £1,045 million. There was also a sharp rise in motor insurance underwriting losses. The figures, contained in the insurance industry's annual report for 1996, the latest available, reveal that motor insurance underwriting losses rose from £41 million in 1995, to £90 million last year.
"Taking into account investment income earned on reserves in this class, however, there was a technical profit of £31 million, down from £101.2 million in 1995," the report says.
The report which covers all sectors of the insurance industry, found that underwriting losses on liability insurance had also increased from £54 million or 25 per cent of net premium to £64 million (29 per cent of net premiums).
Fire and property insurance underwriting losses were down substantially - to £1 million, compared to a loss of £7 million in 1995.
Total Irish-risk underwriting losses increased from £97 million to £136 million last year, accounting for 11 per cent of net premiums. Allowing for investment income, there was a technical profit of £78 million, down from £138 million in 1995.
The Minister of State for Science, Technology and Commerce, Mr Noel Treacy, said that despite poor results in some areas, the industry as a whole continued to make relatively healthy profits.
There was a sharp rise in total new premiums in the life assurance sector which experienced an increase of 59 per cent in 1996, compared to 1995.
Premiums rose from £839 million to £1.3 billion. Of this figure, £997 million related to Irish risks, compared to £650 million in 1995.
The increase was accounted for equally by the life and pensions business, in the Irish market.
The report says new single premium business rose by 65 per cent last year, while new annual premium business increased by 35 per cent.
"In the case of IFSC undertakings, new single premium business increased by 103 per cent, from £150 million in 1995, to £305 million last year," the report says.
However, it points out that new annual premium business remained static at £13 million.
The total gross premium income increased by 27 per cent, from £1.95 billion to £2.48 million. Of this, Irish risks income amounted to £2.08 billion, compared to £1.7 billion in 1995.
The report also found that the number of new companies in the IFSC continued to rise.
It said Dublin was now established as one of the top ten domiciles in the world for captive insurance companies. More than 70 direct or captive insurers have been approved for the IFSC to date.
Mr Treacy, said that this was the second year insurers had been required to disclose investment income on services - funds held to meet future claims.
"While returns on investment income may vary from year to year and may not always be sufficient to cover underwriting losses, there is now greater transparency in assessing the overall profitability of the various classes of insurance business," he said. Mr Treacy pledged that the Government would continue to play its part in tackling the fundamental causes of high insurance costs for individuals and for business. He said a key element in the Deloitte & Touche report on the insurance industry was its recommendation to set up a Personal Injuries Tribunal, to deal with insurance compensation claims in a non-adversarial manner.
A special working group under the Department of Enterprise, Trade and Employment has already recommended an occupational injuries mediation service which Mr Treacy said he was pursuing with the relevant interests.
