Savvy firms to recoup some of freak winter-weather payout
IRELAND's insurers have to pay out €541m to cover the cost of November's floods and the 'big freeze', but they'll be able to claim a substantial amount of that back from their own insurers.
Insurers commonly "re-insure" their policies -- rather than shoulder all the risk themselves, they pass some of it on to a third party, which provides insurance for the insurers themselves.
Exceptional weather events such as floods and freezes trigger a special type of re-insurance, known as "catastrophe" re-insurance.
Policies vary, but some insurers could be reimbursed for any claims they pay beyond a certain level. And other insurers could be repaid for a certain percentage of their "catastrophe" payouts.
The Financial Regulator has no rules on how much re-insurance companies must buy, so the level held varies wildly -- the more risk-conscious insurance companies would pay to re-insure swathes of their business against different events, while others might not.
Irish Insurance Federation boss Mike Kemp yesterday said insurers would be able to "claw back a substantial amount" of their losses from their own insurance.
But he stressed that insurers faced having to pay higher premiums for re-insurance when they came to renew their own policies.
These higher re-insurance costs will ultimately be passed on to customers, in the form of higher premiums.