Severe storm and flood damage to property last year contributed to a dramatic increase in underwriting losses on fire and property insurance, to £37.3 million (€47.4 million) from £1.6 million in 1997.

The Insurance Annual Report for 1998 shows that although a reduction in the cost of claims led to an improvement in the underwriting performance of motor insurers, total Irish underwriting losses for non-life business increased to £210 million in 1998 from £184 million a year earlier.

Underwriting losses in the motor sector fell to £99 million from £114 million. Meanwhile, investment income contributed to a technical profit of £16 million in this insurance class, compared to £31 million in 1997.

Liability insurance losses were broadly unchanged at £81 million compared to £80 million in 1997.

Losses as a percentage of net premium income, however, remained the same at 14 per cent as total net premium income rose by 12 per cent to £1.46 billion.

But investment income in the sector fell by 14 per cent, resulting in a technical profit of £11 million last year, down from £74 million in 1997.

The life assurance sector enjoyed a strong performance, as total new premiums written in the Republic rose by 73 per cent over 1997 to £3.63 billion.

New single premium, or lump sum, business increased by 79 per cent, while new annual or regular premium business was up by 40 per cent.

"The strong economic climate and market conditions were major factors in the increased levels of business," the report said.

It also said the number of companies setting up in the International Financial Services Centre continued to increase, reflecting Dublin's growing reputation as a prime location for international insurance operations.

By the end of 1998, 60 direct non-life insurers were established in the centre, along with 15 life assurance firms. Among the companies with insurance operations in Dublin are BMW, Coca-Cola, Ericsson, IBM, HJ Heinz, McDonald's, Seagrams and Volvo.