Hike in cost of home and motor cover 'inevitable', says top insurer
A RISE in the average cost of home and motor insurance this year is inevitable, the head of one of the country's biggest insurers has said.
Andrew Langford, chief executive of insurance giant FBD, said both types of cover had become too competitive and could not be sustained at current low prices.
Car insurance prices were particularly unsustainable, he said, noting that FBD now expected to raise car insurance premiums by 2pc to 3pc in the coming months.
Mr Langford's comments are just the latest in a spate of evidence that the tide is turning for Irish motorists, who have enjoyed big declines in the cost of motor insurance premiums for several years. Consumers were shocked late last year after it was revealed that the country's biggest general insurer, RSA, introduced a hike of 13pc to motor premiums in September.
Adding to the problem is an emerging spike in motor-related claims as the economy recovers and people return to the roads. This should further force up premium prices, experts say.
Statistics for the state body that handles motor injury claims showed a jump in claims in the first six months of last year – some 5,300 applications for compensation were made between January and June 2013.
Home insurance prices were also too low, Mr Langford said. Heavy winds and flooding in recent weeks would take a toll on insurers' ability to keep premiums down, he added. This winter's storms represented the first major weather event to hit insurers since 2010. Industry body Insurance Ireland estimates they cost insurers about €130m.
In FBD's case, the impact of the storms is expected to result in lower-than-expected earnings for 2014. However, Mr Langford said there were no plans afoot to hike home insurance premiums in the next couple of months.
The cost of the company's farming insurance products should stay stable.
"The market is probably where it should be," he said. FBD is the biggest agricultural insurer in the country, controlling about 70pc.
The chief executive was commenting on the announcement of FBD's 2013 financial results, which were released yesterday. The company, the only dedicated Irish insurer of its type on the market, saw a slight decline in profits.
Hit by a small number of very large accident and liability claims, in excess of €1m each, its profit before tax fell by 2pc to €51.5m in comparison to 2012. However, it also managed to grow its market share to 13.4pc during the year, a new high.