Tuesday 20 March 2018

Calls for cuts in premiums as profits at Aviva surge to €82m

Photo: Bloomberg News
Photo: Bloomberg News

Charlie Weston Personal Finance Editor

INSURER Aviva saw its profits surge in this country last year, in a development that is set to raise questions about the high cost of motor insurance.

The company said its operating profits jumped by 20pc to €82m in 2016.

This was up from €68m in the previous year.

All insurers have pushed up premiums, with the average policy going up by around 60pc in the last three years.

The head of the Consumers' Association lobby group, Dermott Jewell, said the jump in profits meant Aviva should now reduce its premium rates, particularly for motorists.

"It is time for some of the benefits to be passed back, especially to drivers.

"The level of increases for consumers, particularly motorist, have been clearly and completely out of line."

Aviva said its general insurance business recorded a 19pc increase in net written premium to €461m. Its general insurance business consists mainly of motor and home cover.

A key measure of profitability in general insurance, the combined operating ratio, was 91.1pc. Any figure below 100pc means a general insurer is making profits.

Operating profits in the general insurance division rose by 25pc at the Irish unit of the giant insurer to just short of €50m, with the company helped by benign weather last year.

Chief executive John Quinlan said: "We increased our customer numbers while maintaining our strategy of providing cover at a price that is competitive and sustainable.

"The number of customers doing business with us digitally has doubled and we have seen a 90pc increase in the number who have bought more than one of our products."

At the group's life insurance business in Ireland, there was a 14pc rise to €32m in operating profits.

"Growth has been particularly strong in our range of post-retirement products but volumes were up in a large number of products where we outperformed the market," Mr Quinlan said.

The insurer has a reputation for vigorously defending personal injury claims it feels may be exaggerated or false, often going to court when it would be cheaper to settle the case.

But asked if it was not ripping off consumers, and motorists in particular, by charging so much for cover, it said: "As a prudent insurer, we price our risks responsibly in the best interest of our customers.

"The premiums we quote cover the rising cost of claims when the risks we cover materialise."

The company added that private motor was a small component of its profit.

It would not say by how much motor premiums were increased last year, but said it saw a year-on-year growth of 9pc in all private motor premium sales.

The company said the cost of claims remains a serious challenge in the motor market. It welcomed the Government's Working Group Report to address the high cost of claims.

Irish Independent

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