[Article] €1bn profit for top insurance firms signals premium cuts

Scruff

From todays Irish Independent

IRELAND'S non-life insurance companies are set to make more than €1bn profit this year - up from €747m last year.

The €250m growth is a surprise considering that premium rates have continued to fall in 2004.

It is all the more surprising, because the industry was in losses four years ago. And it suggests there is scope for premiums to fall further.

Hibernian, Allianz and AXA, who between them have close to 60pc of the market, all said yesterday that premiums are continuing to fall.

Hibernian's John Kennedy said the reductions have been double digit in motor insurance but less steep in property and liability.

AXA Ireland chief executive John O'Neill said on average his motor customers will have received 8 to 9pc reductions so far this year but he stressed "not everybody will see the same reductions". He said average premiums paid in 2004 have now gone below the average paid in 1999 allowing for inflation.

"This should be music to the ears of Donnie Cassidy (chairman Joint Oireachtas Committee for Enterprise and Small Business and critic of the industry) and Mary Harney," he said.

"The outlook for pricing is benign," he added, arguing that if the Personal Injury Assessment Board (PIAB) succeeds, and claims cost and stability are achieved, "we can look forward to getting another 5pc off premiums in the medium term."

Three of the companies who write our motor, property and liability cover have already posted really strong profit growth for the first half of 2004. This is a trend market observers feel is consistent through most of the 20-strong companies in this sector. The vast majority do not ever publish their operating performances - good or bad.

Stock market-listed FBD yesterday reported a 27pc growth in its insurance division's profit to €62m for the six months ended June. This had followed growth rates of 60pc and 33pc at Hibernian, market leader in general insurance, and Quinn-Direct respectively.

Profits of AXA Ireland - which vies with Hibernian for the title of largest motor insurer - have this year been lumped into returns from its UK\Ireland division so are not so visible. However, market estimates point to growth of the order of 40pc on the corresponding first-half, or operating profits of circa €72m.

Taking the average growth trend reported for the half year of 40pc as a proxy of industry-wide growth for the whole of 2004 then the €billion mark will be breached based on last year's outturn.

There are risks inherent in projecting ahead in this industry which can be hit very sharply - as in November 2002 - by extreme weather conditions.

But as things stand, conditions are as benign as this sector has seen in many a year. The industry is concerned at a rising death toll on the roads, which has reversed the welcome improvement in the statistics in the months following the introduction of penalty points.

The companies currently contribute about €1.1m a year to the Road Safety Council through the Irish Insurance Federation.

Cyril Hardiman

funny the way they posted losses 4 years ago and then september 11 happens, they slap on increases due to septebmer 11, terrorism, martian invaisions and they post record profits ever since. hmm......

John R

Profits up by 40%, premiums down by 8-9%, the first FF/PD pr1ck to claim this as some sort of government caused consumer victory will be deserved of emersion in a vat of battery acid.

star gazer

PIAB is hopefully going to take the bulk of the lawyer money out of the equation (ie premium). will that be as far as the political side will move?

LFCFan

for the amount of profit being made be these greedy bastards, premiums should be coming down by 20%, not 5%. They have been fleecing us for years, claiming everything from 'boy racers' to September 11th as the reason for high premiums and yet at the same time they've been recording ever increasing profits. It's scandalous that this can continue. We are required by LAW to have car insurance and yet the government sit on their far arses and let this kind of daylight robbery continue. Insurance costs have contributed a substantial amount to the ripoffireland culture by raising costs for businesses who then added their own little margin on top to make prices spiral out of control. It's time for this to stop and for premiums for all insurance to drop to levels that will allow some reductions in prices back to a level that will allow us to have a better standard of living in Ireland.

dudara

We are required by law to have insurance, but we are not required to be ripped-off. This is a pipe-dream, but if everyone stopped paying insurance, government would have to notice. Ah flights of fancy eh??