Insurance bills to rise after RSA difficulties
INSURANCE customers are expected to see a rise in motor and home insurance premiums amid the fallout from financial difficulties at Royal Sun Alliance (RSA).
The expected rise in premiums comes after the embattled British-based insurer, which owns the 123.ie brand here, hiked its motor premiums an average of 13pc in September.
The Central Bank is unlikely to take further action against RSA after it underwent an emergency injection of capital and oversaw the dramatic suspension of its three top executives last Friday.
The insurer, which has 90,000 customers and 1,000 staff in Ireland, took the swift action after "issues" emerged in its Irish division.
The company was forced to inject €100m into its Irish business to restore solvency margins after it emerged that issues had been uncovered by a routine audit of the operation here.
Last night, RSA confirmed that it had appointed PriceWaterhouseCoopers to undertake a "comprehensive review of the issues identified in its Irish claims and finance functions".
Simon Lee, group chief executive of RSA, said: "While the investigation is ongoing, I am confident that these issues are isolated to the Irish business.
"No policyholders have been affected and all our Irish businesses continue to operate as normal. While these issues are serious, they do not have a material, long-term impact on the group. Our capital position remains robust," he added.
While RSA suspended three senior executives at its Irish business pending an investigation, no findings of wrongdoing have been made against the men.
Days before it moved to suspend its top executives, RSA warned that there was an increasing trend of more severe bodily injury claims in Ireland and it was going to have to boost its reserves.
However, it stressed that this issue was separate to the issues that emerged during the company's internal audit.
But a leading insurance broker said that RSA was likely to seek to recoup the €100m it's been forced to inject to shore up the Irish arm due to under-provisioning for insurance claims.
He predicted that over the next 12 months, insurance premiums would rise for consumers generally. Another industry source said an average rise of about 5pc in premiums would not be surprising.
But the increases coming down the track aren't just on the way because of the difficulties at RSA.
Limerick-based insurance broker Denis Ryan of Ryan & Riordan said: "Premiums have been so low that they have to go back up."
The debacle at RSA is set to inflict a £70m (€84m) hit to the insurance group's operating profits this year.
Questions have been raised as to the Central Bank's oversight of RSA, although it is understood that the watchdog had been monitoring the insurer for a number of months.