Insurers forced to hold more capital amid claims cost crisis
NON-life insurers have been forced by the Central Bank to increase their capital by €142m this year to meet solvency requirements as the loss-making industry grapples with soaring motor injury claims costs.
Motor premiums have soared by almost 70pc in three years as insurance companies have been accused of under-pricing motor policies and of not putting aside sufficient reserves to meet claims.
Earlier this month, Central Bank Deputy Governor Cyril Roux, with responsibility for financial regulation, faced sustained questioning at an Oireachtas committee over the bank's role in the burgeoning insurance crisis.
Mr Roux faced accusations by chairman of the Joint Committee on Finance and Public Expenditure John McGuinness that it was not doing enough to protect consumers.
Mr McGuinness said he intends to recall Mr Roux as well as members of industry group Insurance Ireland to face additional questions about problems facing the sector.
Writing in today's Irish Independent, Mr Roux said that the bank "intervened forcefully" between 2013 and 2015, when insurers had to increase their capital by €615m, with another €142m this year. Mr Roux said other actions taken by Irish non-life firms include increased support from their parent companies and increased reinsurance cover.
Motor insurance claims have surged by 42pc since 2005 to €1.3bn at a time when premiums fell by a quarter to €1.25bn.Irish insurance companies providing non-life cover ran up combined motor underwriting losses of €684m from 2013 to 2015.
The Government has set up a task force to undertake a review the sector which is reeling from a series of controversies.
This includes the collapse of Setanta Insurance, the multi-million euro bailout of the State's largest general insurer, RSA, by its parent, and the earlier failure of Quinn Insurance.
Last January, international credit agency Standard & Poor's said that, without the almost €400m pumped into RSA Ireland in 2013 by its UK parent, it would have breached its solvency requirements due to "financial and claims irregularities".
Under laws introduced in 2013, the Central Bank can fine firms as much as €10m, or 10pc of revenue for regulatory breaches and individuals as much as €1m.