Insurance costs to rise after terror attacks

Consumers in Ireland are being warned to expect hikes in the cost of house and car insurance following the US terrorist attacks…

Consumers in Ireland are being warned to expect hikes in the cost of house and car insurance following the US terrorist attacks.

AA Insurance Services said the high cost of claims and volatile stock markets are all likely to lead to price increases.

The estimated cost of the attacks to the insurance industry is between $30 billion and $50 billion.

The cost of reinsurance is expected to increase 10-fold.

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Companies' revenue from equities is also likely to be hit by stock market volatility, making it difficult for them to recoup the money lost paying out on claims.

Mr Kerry Richardson, managing director of AA Insurance Services, said: "I have never before seen the three overall drivers [of the insurance market] negative at the same time to this extent.

"If you take the three factors together it puts a very negative view on the health of the sector, when they wash through I expect the underlying prices to go in one direction".

He said although it was difficult to predict how steep the price increases would be, consumers were likely to see premiums start rising during the last part of the year.

PA