An increase in accidents led to a 133 per cent rise in underwriting losses for motor insurers last year, according to the Irish Insurance Federation. However, an IIF spokeswoman said that most insurers would have made a profit from investment returns.
In its annual Fact File report, the IIF calls for the cost of settling claims to be brought into line with the European norm. It says Ireland's compensation system for personal injuries is among the most generous in Europe and that these claims constitute a greater proportion of claims made by Irish policyholders. The IIF president, Mr Kevin Murphy, said yesterday that the increase in underwriting losses in motor insurance, from £39 million in 1995 to £91 million in 1996, had inevitably led to an increase in premiums. Last year, a total of £652 million in premiums was paid to motor insurers. He added that the only solution for reducing motor insurance premiums was to work on making road users more safety conscious and create greater deterrents for those who drive dangerously. There were 180,400 motor claims in 1996, compared to 145,700 in 1995.
Guardian/PMPA has a 30 per cent share of the motor market, having taken £197 million in premium income, compared to £75 million taken by Hibernian Insurance (11 per cent market share), and £51 million taken by FBD (8 per cent market share). Guardian/PMPA's dominance of the motor market was the major factor in its overall 18.8 per cent share of the non-life market, with Royal Sun Alliance and Hibernian vying for second place. Overall, the market shares of the main players in the non-life sector are little changed from the previous year, with the merged Royal and Sun Alliance taking roughly the same share as the two companies did separately.
Mr Michael Kemp, chief executive of the IIF, said third party claims, most of which were for personal injury, accounted for about 70 per cent of the total cost of motor insurance claims. But accident frequency trends appeared to be down this year so far, he said.
According to the IIF report, there are over 2,000 claims against uninsured drivers - about 4 per cent of all drivers - annually through the Motor Insurers' Bureau of Ireland (MIBI). Last year, liability insurers saw losses increase by £12 million to £59 million. The manager of the IIF's non-life insurance section, Mr Michael Horan, added that the number of motor insurance claims had gone up by 23 per cent, which, taken with the level of the awards, accounted for the underwriting losses. The cost of settling a personal injury claim was up to four times higher than in the UK, he said.
In the general non-life insurance area, losses increased by £54 million on the 1995 figure to £145 million. "Irish non-life insurers have not made an underwriting profit for many years, because the amount of claims incurred, plus management expenses and commissions paid to intermediaries, has always been greater than premium earned," the IIF report says. However, IIF non-life members took in £1.35 billion in premiums, £200 million more than it paid out in claims of £1.15 billion. The IIF pointed out that commissions, salaries and operating costs would also have to be factored in.
The non-life industry also made an estimated £259 million in investment income in 1996. But the report points out that investment income "cannot be guaranteed to make up for underwriting losses of the scale that have become habitual in the Irish market, and therefore underwriting break-even must continue to be the target of the market and the supervisors".
