Premiums set to increase as claims on the rise (Irish Times)
Consumers are likely to see their insurance costs, particularly motor premiums, increase over the coming year as the industry struggles with rising claims and falling product sales.
According to the Irish Insurance Federation's (IIF) annual Factfile survey, overall gross insurance premium income increased by 11.1 per cent to €18 billion in 2007, but since then the operating environment has deteriorated.
IIF chief executive Mike Kemp said much of the 2007 non-life insurance business had been written at a loss, and this trend had accelerated into 2008 in "highly-competitive market conditions".
In 2007, the Irish Insurance Federation's 22 domestic non-life members, which account for 95 per cent of the Irish market, saw their net underwriting profit hold steady at €690 million, down just 1 per cent on 2006.
However, the volume of gross premiums written by non-life members declined by 5.5 per cent to €3.6 billion, while there were 532,734 new claims, a rise of 10.4 per cent.
Premium income from employer's liability insurance (down 18.5 per cent) and public liability insurance (down 13.7 per cent) experienced the largest falls, while the non-life market was also severely impacted by weather losses arising from this August's storms, which cost member firms nearly €100 million.
Overall, property insurers recorded a fall of 57 per cent in net underwriting profit, down to €75 million, as net incurred claims rose by 17 per cent to €485 million.
Gross written premium for motor insurance dropped by 5.4 per cent to €1.5 billion in 2007.
Mr Kemp noted that there were signs that motor insurance premiums had passed the lowest point in the cycle and were beginning to rise again.
In the life insurance sector, domestic premium income increased by almost 16.3 per cent to €14.3 billion in 2007, while new annual premium business grew by 8 per cent and new single premium business increased by 25 per cent.
However, according to Mr Kemp, life sales growth slowed down substantially in late 2007, and has actually fallen in the first half of this year, "reinforced by the recent drop in investor confidence arising from the turmoil in global financial markets".
Employment in IIF member companies increased by about 5 per cent during the year and almost 800 new employees were hired during 2007.