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FBD accused of ripping off customers as profits double to €100m

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Soon to depart: FBD boss Fiona Muldoon expects profits to double.

Soon to depart: FBD boss Fiona Muldoon expects profits to double.

Soon to depart: FBD boss Fiona Muldoon expects profits to double.

Insurance company FBD has been accused of ripping off its customers after it said it expects to report a doubling of profits.

The company, the only Irish-owned insurer, said it expected to report profits before tax of €100m for last year. This is a massive jump on its €50m profits earned in 2018. FBD has a strong presence in the farming community and has a large market share in rural areas.

In a brief note ahead of its financial returns on February 27, FBD said the performance was "mainly due to a strong positive prior year reserve development" plus weather and investments. FBD also reported profits of €50m in 2017 and €11m in 2016.

Headed up by soon-to-depart Fiona Muldoon, the company drew the ire of the Alliance for Insurance Reform and business group Isme when it told the stock exchange it expected to report bumper profits for 2019.

Asked if it was ripping off its customers, an FBD spokesman said the firm had no comment.

The Alliance for Insurance Reform said: "This trading update from FBD only confirms what report after report have already confirmed - that motorists, small businesses and voluntary groups are being ripped off by insurers and lawyers and held to ransom on the back of their relentless drive for profitability."

Peter Boland of the Alliance said policyholders were the big losers, with insurers and lawyers winning from the insurance crisis. "We have seen laid bare over the last year the scale of the greed that has driven the current insurance crisis, enriching insurance companies and lawyers at the expense of whole sectors of Irish society struggling to make ends meet," he said.

Mr Boland said the Government had been too slow to react to the crisis and too weak to take on the big vested interests in order to make a difference. He said the outgoing minister of state with responsibility for insurance, Michael D'Arcy, recently said insurers were making €250m a year out of motor and liability insurance while lawyers were making €350m.

"If these figures are the start of a trend, and we believe that they are, then he will have to dramatically update his figures," Mr Boland said.

Business group Isme called for the cutting of premiums.

Firms and community groups are under huge pressure from rising premiums, with the situation exacerbated by the departure of a number of insurers from this market.

Chief executive of Isme Neill McDonnell said: "The increasing profitability of insurers in Ireland suggests they will have plenty of scope to reduce [premiums] in 2020."

He was highly critical of lawyers for extracting huge fees from personal injury insurance claims. He said a recent Central Bank report found that on personal injuries claims below €100,000, legal costs amount to an average of 63pc of the damages awarded.

The same Central Bank report found that insurers were making average profit margins of 9pc up to 2018, with insurers expected to be even more profitable last year.

In the decade to 2018, motor premiums across the entire market rose by 42pc, at a time when claims costs fell.

Irish Independent