FBD boss says insurance firms 'demonised' as premiums rise
Stock market-listed FBD is the latest insurance firm to post an increase in profitability as consumers and businesses bear the brunt of swingeing increases in the cost of their motor and other premiums.
FBD's pre-tax profit hit €11.9m in the first half of the year, compared to a €3.6m loss in the first half of 2016, it reported yesterday.
The latest profit figure was flattered by a €5.6m provision release following the Setanta Supreme Court judgment.
The Supreme Court ruled in May that the Motor Insurance Bureau of Ireland was not potentially liable for up to €90m in claims that may be outstanding following the collapse of Setanta Insurance.
FBD's gross written premiums rose 4.9pc to €189.7m in the first half of the year, reflecting an average rate increase of 5pc in the first-half compared to the first six months of 2016.
But FBD chief executive Fiona Muldoon has insisted the company is not "gouging" customers with rises and that such claims "are not borne out by facts".
She told the Irish Independent that FBD had a profit margin of 7pc in the first half of the year and had taken "all the pain and medicine you'd expect" to return the business to profitability.
"For our shareholders, we must return a profit, or we don't survive," she said. "They're the rules of capitalism. We want to make a fair profit on a fair product sold in a fair way."
Motor insurance premiums have risen by 70pc on average over the past three years, across all operators.
The claims environment has been, and continues to be, broadly challenging, with courts continuing to award big payouts to claimants.
Ms Muldoon said the group is seeing "some signs of moderation" in terms of awards made to claimants.
"A levelling off or a drop can't come soon enough," she said.
"With all the demonisation of insurance companies versus their customers, sometimes what gets missed is that it's much harder to sell an insurance policy to your customer when you're also trying to sell a price increase."
Ms Muldoon said she understood the anger that people are feeling towards insurers, but said the industry is still "a long way" from seeing downward pressure on insurance prices.
"I understand the frustration," she said. "There was a sudden [price] correction and very hefty increases on top of that which is very hard for household budgets, it's very hard for people to manage, and to understand.
"I completely get that people are angry.
"SMEs as well as motorists also have very tough increases to swallow," she added.
"We made a margin of 7pc. That is not an enormous margin. The idea that we're gouging profits out of motorists is just not borne out by the facts."
FBD's core insurance profits in the first half of the year were 15pc ahead of forecasts, according to Goodbody Stockbrokers, with net earned premiums up 1pc, costs down 3pc and claims costs in line with expectations.
Ms Muldoon declined to say by how much premiums might rise in the remainder of the year, citing an on-going probe by the competition watchdog into previous advance price increase announcements made by insurance firms.