Central Bank warns Brexit will hit competition in insurance market
The Central Bank has warned of reduced competition in the insurance market in the event of a British exit from the European Union.
In a report issued earlier this week, the Bank said: "A Brexit from the EU could have implications for insurance firms located in Ireland conducting business in the UK market, while the possible removal of UK competitors may benefit other firms operating in Ireland."
"UK firms doing business in Ireland, and Irish firms doing business in the UK, currently do so on the basis of the single market. A UK decision to leave the EU could result in its also leaving the single market, though not necessarily. The range of possible new arrangements should this happen is wide and would need to be assessed in light of developments," it added.
"Depending on the nature of the Brexit, if it were to occur, Irish insurers may face restrictions upon their ability to conduct cross-border business into the UK and, similarly, UK insurers operating in Ireland may face restrictions.
A reduction on competition in the sector would be further bad news for consumers who have faced large premium hikes.
"The domestic, non-life insurance sector continues to experience severe operating challenges. All of the high-impact firms reported underwriting losses in 2015 such that aggregate losses, amounted to €284m on their global business. Contributing to this are increasing claim costs stemming from legislative and judicial changes and increased economic activity," the Central Bank said.
The poor environment has led to widespread calls for reform. Small Firms Association president AJ Noonan said in April that small businesses in this country are facing an "insurance cost crisis".
"The significant cost increases being borne by small business is resulting in job losses and non- expansion by companies. If the current situation is allowed to continue it will become impossible to do business in Ireland both from a domestic and from a foreign direct investment perspective," he added, calling for an overhaul of the Book of Quantum the guidebook used by the Injuries Board to assess how much compensation should be awarded in personal injuries claims.
Finance Minister Michael Noonan has said Ireland will back keeping Britain in the single market, even if Brexit happens.
Noonan played down the tough stand of German finance minister Wolfgang Schauble, who said the UK would be locked out of the single market.
"What Mr Schauble says is legally and technically correct, but I don't think it is the end position," Mr Noonan told the Sunday Independent.
Sunday Indo Business