Hike in insurance costs to hit motorists next year
CONSUMERS and businesses are being warned to brace themselves for higher insurance costs in the year ahead.
FBD Insurance said that "there is early evidence of rates hardening in the market" – particularly for car and business insurance.
FBD itself refused to be drawn on whether it plans to hike its rates for customers in the coming year, or by how much.
But industry sources said higher prices look inevitable across the sector.
That's because of a rise in the so-called "combined operating ratio", a measure of the cost to the insurance industry of paying out on claims, compared to what it brings in from premiums.
That ratio rose to 109pc in 2012, meaning firms paid out €109 for every €100 paid in by customers.
It is up on recent years, in part because the gradual economic recovery is putting more cars and trucks on the road – leading to a higher number of crashes and in turn, insurance claims.
But it does not mean insurers are running at a loss, because the sector makes a lot of its money by amassing huge amounts of cash and then trading on the markets.
Stock-market listed FBD made the comment in an interim management statement, where the company said profits for the year are expected to match forecasts.
It is the latest evidence of rising insurance costs, after customers of Royal Sun Alliance, the biggest general insurance company, said it pushed up premiums by 13pc in Ireland this year.
That hike was a multiple of the single percentage point rises imposed by other motor insurers.
Earlier this month the state body that handles motor-injury claims said that there is no basis for a rise in premiums, even after a higher number of claims in the first six months of the year. There were close to 5,300 claims in the first six months of 2013.