Saturday 16 December 2017

Insurer RSA returns to profit but claims market remains challenging

RSA is back in profit but their are concerns over premium hikes
RSA is back in profit but their are concerns over premium hikes
Charlie Weston

Charlie Weston

Motor and home insurer RSA saw its Irish division return to profit in the first half of the year.

It comes after the Irish unit of the UK insurer was hit by a massive accounting scandal in 2013.

The return of a number of insurers to profits raises questions about the level motor insurance premium rises, which have being as high as 70pc.

RSA warned that the market in Ireland remains challenging, in particular for claims inflation.

Net premiums for the group's Irish division rose by 1pc to £152m (€170m) in the six months to June.

The insurer reported a profit of £2m (€2.23m) over the same interim period.

This was up from a loss of £1m (€1.1m) in the same period in 2016, the group said in a regulatory filing in London.

It said it expects to be profitable for the 2017 full year.

In a statement to the London Stock Exchange, its British parent said: "In Ireland we continue to target a return to operating profit for the full year 2017, although the market remains challenging, in particular for claims inflation."

In the past fortnight the Department of Finance has released a report showing that motor insurers have increased premiums far more than it is costing them to settle claims.

It said insurers have now returned to profitability after massive hikes in premium rates,

The cost of compensation payouts to motorists injured in accidents rose by 15pc between 2013 and last year.

But over the same period premiums have been jacked up by 70pc, the department's figures shows.

This raises questions about whether insurers have overdone premium hikes.

And last month European Union investigators carried out dawn raids on Insurance Ireland, the representative body for the industry, insurance companies, and brokers.

Officials from the EU's Competitive Directorate are investigating the possibility that an insurance cartel is operating within the Irish motor insurance industry.

They are understood to have been preparing for the raid for months.

The EU authorities were accompanied by Irish competition watchdog personnel and gardaí, when they swooped.

RSA was Ireland's biggest insurer until it was the subject of a massive accounting scandal in late 2013.

This led to the sacking of three senior executives, including the then CEO Philip Smyth and the RSA parent group had to inject €500m into the Irish unit to bail it out.

RSA Insurance Ireland reported a loss of €198m in 2014.

RSA group increased its first half dividend by almost a third.

RSA's increase came on the back of a 15pc rise in operating profits to £360m. That was ahead of analysts' forecasts of £338m.

Irish-quoted insurer FBD is due to report interim results tomorrow and is also expected to be profitable.

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