Q & A: What is happening at FBD?
Published 25/08/2015 | 02:30
What is happening at FBD?
FBD reported a loss of more than €96m yesterday for the first six months of the year. It was one of the company's biggest losses for a half year on record. It will not be profitable until 2016.
The company, which is the only publicly-traded insurer in the country, is being battered by higher insurance claims.
It is also reeling from a disastrous decision to expand away from insuring a rural consumer base to offering low-price motor insurance to urban customers through its Nononsense.ie brand.
FBD got caught up in a situation where most motor insurers were selling their policies too cheaply and not putting enough money aside to cover claims.
The group also has to put more money into its reserves in line with new regulatory requirements.
FBD has now increased its reserves to cover claims by €88m. That meant the company made a loss, before tax, of €96.4m for the first half of the year.
What does it mean for my insurance premium?
FBD said it pushed up motor premiums by 21pc last year.
This means a premium that cost €500 went up by more than €100. Now the company says its motor premiums are set to go up by another 10pc in the coming months.
This will mean that €500 premium will cost €665 in less than a year. Other insurers are also pushing up motor premiums. AA Ireland says it has increased prices by 20pc across the board, one of the highest increases in a decade.
Home insurance is more competitive, so it is less likely that there will be big increases in this sector.
Business insurance rates, however, are also likely to rise.
I am a farmer, what will this mean for me?
FBD says it is retreating back to its core market, with farmers and those living in rural areas making up this group. The insurer has promised not to hike premiums for farmers.
But an FBD spokesman confirmed that farmers should only expect to be paying more for their general car insurance in coming months, rather than shouldering any hikes in other farm-related premiums offered by the company.
The company said that rate increases for farmers are likely to be "more modest" than those its other customers can expect. However, farmer shareholders in FBD are in for big losses.
The company's share price fell sharply yesterday, and has now seen a 50pc reduction this year alone.