MOTOR AND home insurance costs could rise by up to 10 per cent this year, according to one of the country’s biggest underwriters.
Quinn Insurance wrote to brokers yesterday telling them that the company made €72 million in operating profits from just over €1 billion in premium income, a return of about 7 per cent. In 2007, its operating profits were €161 million, a return of about 16 per cent.
However, investment losses of €130 million, stemming from the slump in global equity and property markets last year, left it with a pretax loss of €58 million last year, compared with a €245 million gain in 2007.
The letter, signed by the company’s chief executive, Colin Morgan, tells brokers that the company has “experienced premium rate increases across most business lines”.
Mr Morgan told The Irish Timesyesterday that he believes that overall increases this year in charges for motor and general insurance should be 10 per cent.
Along with other insurers, Mr Morgan said the company has seen an increase in claims over the last year. He pointed out that the resulting higher risks were driving up the cost of insurance.
The results released to brokers yesterday cover the company’s motor, general, commercial and health insurance businesses.
The insurer’s parent, the Seán Quinn-controlled Quinn Group, had cash profits in 2008 of €466 million, and is expecting to earn a similar surplus this year, the company tells its brokers.
Quinn Group’s interests span manufacturing, including glass, radiators and plastics; property, made up of business parks and hotels in Ireland and Europe; energy, health and general insurance and building materials.
Mr Morgan said yesterday that the returns from the insurance business were good against the background of the current economic climate. “We had a 7 per cent return on underwriting and we’re happy with that,” he said.
It entered the health insurance market by taking over the business of British insurer Bupa, which pulled out of the Irish market in late 2007.
It left in a dispute over risk equalisation, a mechanism applied by the Government designed to ensure that everyone pays equal amounts for cover, irrespective of the probability of their falling ill.
Mr Morgan said yesterday that health now amounts to between 25 per cent and 30 per cent of its premium income. Quinn successfully challenged the Government’s risk equalisation model in the courts.
Since then, the Government has come up with an alternative scheme that combines tax reliefs for people aged over 50, who are at a greater risk of falling ill, combined with a levy on all companies in the market.
The EU has to approve this system before it can be implemented as it qualifies as a state aid. Brussels bans such aids where they distort competition in markets, unless there are specific policy grounds for allowing them.
Europe is expected to decide shortly on the new scheme, which the Oireachtas passed late last year.
Mr Morgan said yesterday that Quinn supports the new approach, and the principle that everyone who pays for health insurance should pay the same amount for the same level of cover, irrespective of the risk. The company’s letter tells brokers that the company has “maintained strong underwriting discipline”.
