Motorists are likely to see further cuts in their insurance premiums following "a bumper year" for the insurance industry, the Irish Insurance Federation (IIF) said yesterday as it published results for the non-life industry, reports Laura Slattery.
The 20 companies in the market made a combined pre-tax operating profit of €747 million in 2003, more than three times the 2002 amount. The motor sector accounted for €385 million of the total.
In 2003 the industry made a net underwriting profit of €397 million, the first underwriting profit in five years.
Over a five-year period insurance companies made a cumulative underwriting loss of €744 million, and losses of over €1.6 billion were incurred over the past decade.
However, over 10 years the industry made a pre-tax operating profit - the net underwriting result plus investment income earned - of over €1.3 billion.
IIF chief executive Mr Michael Kemp said the 2003 results underlined the cyclical nature of the insurance business, which had experienced a recent run of loss-making years.
"Although it has been a bumper year for non-life insurance, the operating profits are not out of line with major Irish companies in other sectors."
Mr Kemp said he believed insurers were striking the right balance between rewarding shareholders and passing on profits through reduced premiums.
"There has been improved profitability, but it has translated directly and quickly into falling premiums. Motor premiums are now back where they were three years ago and they are heading down," Mr Kemp said, citing a new AA survey that indicates a 22 per cent decrease in motor premiums over the previous 12 months.
However, in 2003, 17.6 per cent of the income from premiums paid by consumers went towards insurance company profits, compared to just 5.5 per cent in 2002.
In motor insurance, over a fifth of the income from premiums paid went towards industry profits, a jump from 9.8 per cent in 2002.
Mr Kemp said there was more scope for further decreases in motor premiums and that consumers should "watch this space".
Many of the measures included in the Government's insurance reform programme were still in the early stages of implementation and their full effects had yet to ripple through, Mr Kemp added.
These include extending the Personal Injuries Assessment Board to motor claims, enacting the Civil Liability and Courts Bill, establishing a Road Traffic Corps and improving workplace safety legislation.
Mr Kemp said increases in home insurance and other property-related premiums had "more or less levelled off" after "fairly significant" rate rises in 2002 and early 2003 were implemented following a number of storms and floods.