Profits in the Republic's motor insurance market plummeted by 38 per cent in 2006, due to a sharp increase in the cost of claims.
According to the Insurance Statistical Review published yesterday by the Irish Financial Services Regulatory Authority, total motor insurance profits reported by all companies operating in the market fell from €418 million in 2005 to just under €259 million last year. Although premium income remained robust at €1.57 billion, the cost of claims incurred by insurance companies jumped €117 million to €1.037 billion.
AXA incurred claims expenditure of €238 million (compared to €201 million in 2005), while Hibernian General reported claims of €224.7 million.
Meanwhile, the accident and insurance segment of the market swung from reporting a profit of almost €40 million in 2005 to a loss of just under €2 million last year.
The figures reveal that one of the most significant contributors to this decline was the €24 million loss reported to the financial regulator by Bupa, which was taken over by the Quinn Group earlier this year.
The overall Irish risk insurance market also saw a downturn, with profit levels dipping by 10 per cent from almost €802 million in 2005 to €718 million.
Premium income remained fairly static in the non-life section of the insurance market - which includes all property and liability insurance - but significant premium growth was recorded on the life assurance side.
The level of premiums generated by life assurance companies increased by 28 per cent to €30.4 billion, which represented 80 per cent of total premiums generated by the insurance industry last year. Motor insurance still remains the largest segment of the non-life market in premium terms, representing 40 per cent of the market.
The market share of property insurance (to protect against fire and other damage) fell slightly, but still represented more than one-quarter of the market.
Accident and health insurance increased its foothold last year, increasing slightly to represent almost 10 per cent of business written in the market.
However, this does not include premiums generated by VHI Healthcare, as VHI is not regulated by the financial regulator and thus does not need to make regulatory returns.
Oliver Tattan, chief executive of rival health insurance provider Vivas Health, said yesterday that this omission reflected the current "disarray" with which health insurance providers are forced to operate.
"In light of the growing importance of accident and health insurance in the overall industry, it is imperative that all companies operating in this space are subject to the same regulatory requirements as soon as possible," Mr Tattan said.
The insurance review also showed that the number of people employed in the Republic's insurance industry increased by 161 to 12,593 last year.
