Motor premiums to rise another 10pc
Published 25/08/2015 | 02:30
Motor insurance premiums at leading insurer FBD are set to rise by 10pc over the next couple of months.
Drivers are already reeling from some of the highest hikes in motor cover in a decade.
It comes as Dublin Stock Market-quoted FBD admitted it pushed up private motoring premiums by 21pc last year.
The company saw its share price shed a fifth of its value yesterday, on a day when world stock markets went into freefall. The shares are now down by more than 50pc this year alone, and are at a five-year low.
Farmers are set to escape higher premiums for insuring their farms, but drivers insured with FBD can expect to pay more.
Asked about motor insurance premiums, acting chief executive Fiona Muldoon said: "Overall, over the next 10 months, we would be looking to do 10pc or so. In the next six months, it will be modest enough across the board."
The higher premiums being charged by FBD mean that a car that cost €500 to insure a year ago is now €100 dearer to insure.
With premiums going up by another 10pc in the coming months, the €500 premium will likely have gone to €665 in the next 10 months.
Other insurers are also pushing up motor premiums. AA Ireland says premiums have gone up 20pc across the board in the last year, one of the highest increases in a decade.
FBD reported a loss of €96.4m for the first six months of the year, one of the largest losses in its history.
The losses are due to spiralling claims and unsustainable premium pricing.
Ms Muldoon said: "2015, from a claims point of view, was the worst in FBD's 40-year history."
FBD blames increased claims costs and what it calls an "increasingly congested and dysfunctional" insurance market.
It said there was evidence of "claims inflation", where there are more claims but it is also more expensive and taking longer to settle claims.
The company is expected to cut about 100 jobs from its 1,050 workforce as part of its efforts to restore profitability by the end of 2016.
It's also planning to shore up its financial position.
FBD is selling its leisure interests, including three hotels in Ireland and two in Spain, to its shareholder Farmer Business Developments for €48.5m. Farmer Business Developments owns almost 29pc of FBD.
It's also likely to raise money on the international debt markets this autumn as an extra solvency buffer in advance of new European Union rules coming into effect on January 1.
FBD will also refocus its strategy on its farming and small firms business.
Ms Muldoon declined to say how many jobs will be lost at the company as it targets €7m in savings.
However, FBD employs 1,050 people and that overhead reduction reflects about 10pc of its total annual overheads, which are largely a function of the number of people it employs.
"There's no way we can achieve €7m in savings without affecting staff," she said.
"But we would be very hopeful that anything we do would be in the voluntary space."
FBD also aims to raise debt on the capital markets in the autumn to bolster its balance sheet in advance of new European Union solvency rules.
Ms Muldoon declined to say how much FBD might raise. But analysts reckon the figure will be around €100m.