Insurers accused of hiking premiums to pay for losses
Published 13/04/2011 | 05:00
INSURERS have been accused of forcing householders to pay for their losses after it emerged that premiums on home insurance are likely to rise by 10pc again this year.
This will be the third year in a row that premiums have risen by 10pc. The insurance industry blamed repeated bad weather over the past three years.
Payouts totalled €224m on weather-related claims for last December and January as 30,000 people sought compensation for burst pipes and damage to houses, the Irish Insurance Federation said.
The total for freeze claims since 2009 was now €750m, federation boss Mike Kemp said.
He conceded that premiums rose 10pc in 2009, and 10pc again last year.
Similar increases are expected this year.
"It is hard to see that we won't see the same upward pressure on premiums this year. We have just had the three biggest ever incidents in terms of insurance claims in a 14-month period," he said yesterday.
Mr Kemp said the average household claim last year was almost €7,000, mainly because of burst pipes.
Severe frost and snowfall last November, December and January brought several parts of the country to a standstill.
Household claims amounted to €173m, with another €50m for commercial claims from the Big Freeze.
Asked why there should not be a big freeze on household insurance premiums, the insurers insisted general insurers were losing money on home insurance.
"Insurance companies are losing 38c for every €1 spent on home insurance," head of general insurance at the insurance federation, Michael Horan, said.
The federation denied it was effectively seeking a bailout from homeowners because it was failing to put sufficient capital aside to cover the latest weather-related losses.
And the insurance body denied that its members had excessively depleted their reserves during the boom by paying out huge dividends to their parent companies.
But the chairman of the Consumers' Association, Michael Kilcoyne, claimed insurers were now effectively asking consumers to bail them out.
He accused the insurance industry of not putting sufficient funds aside to cover claims from severe weather at the end of last year and the start of this year.
"Asking consumers to pay higher premiums because of a failure to properly assess risks amounts to asking for a bailout from householders," he said.
He called for the Department of Finance to investigate the insurance industry.
Brian McNelis of the Irish Brokers Association said more premium hikes this year were almost certain.
"Significant premium in- creases are inevitable as a result of these claims. Insurance cover may also be limited following water damage, flood and snow damage claims."
The insurance federation advised policyholders to take precautions ahead of next winter by ensuring water tanks are properly lagged and that exposed pipes are insulated.