Market shrinks by 26pc as recession takes toll on insurers
Industry body insists members can 'stand the rigours of financial crisis'
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IRELAND's insurance market contracted by 26pc last year as "the global recession and aggravating local factors" took their toll on the sector, industry body the Irish Insurance Federation (IIF) revealed yesterday.
The life insurance market was the worst hit in terms of premium income, with its total revenue slumping by almost 31pc as volatile markets scared punters away from pensions and investments.
The general insurance sector shed just 7.7pc of its revenue but suffered a 79pc collapse in operating profits after appaling weather triggered loses of €174m on household business.
The profits in both life and general insurance were also hit by falling investment returns, which have seen insurers move much of their holdings away from equities and into safer lower yielding assets.
IIF boss Mike Kemp yesterday said factors at home and abroad had "made the business environment difficult" for insurers. But he insisted that his members, who employ 15,000 people throughout the country, were "fundamentally different to banks" and were well-placed to withstand "the rigours of the financial crisis".
Respite
The collapse in the life insurance market left that sector with premiums of just over €10bn in 2008, down from €14.5bn a year earlier. The falls included a 44pc drop in sales of single-premium policies, and a 14pc drop in new annual premium business.
There was some respite for life insurers, however, as the value of benefits paid fell by 12pc to €9.89bn, marking the first decline in recent memory. A spokeswoman for the IIF said the federation had probed the decline but found no obvious reason to account for it.
Mr Kemp struck an optimistic note on the future outlook for life insurers, suggesting that "the continuing crisis in the public finances and uncertainty about future government pensions policy" make now a good time for people to "seriously consider" making provisions for their retirement.
"Signs of recovery in investment markets [also] indicate that this is a good time to start or boost your pensions savings," he added.
On the general insurance side, total premiums for 2009 came in at €3.33bn, against €3.6bn a year earlier.
The sharpest falls were in employer's liability insurance, down 18.2pc; commercial motor, down 11.7pc; and public liability insurance, down nine per cent.
There was pain all round, however, as the 23 general insurers recorded operating profits of €228m against about €1.08bn a year earlier.
The results included losses of €174m on home insurance, amid low premiums and €100m worth of damage from last August's storms, and losses of €53m on motor insurance.
Both motor insurance and household insurance premiums are now on the rise.
- Laura Noonan
