Costs of insurance likely to rise again: Experts

The retreat by Liberty Insurance from the British market with the loss of hundreds of jobs here — is another sign of the troubled times facing the Irish insurance industry, experts have said. The company is one of the big six players in the Irish market.

Analysts have warned that even more premium price hikes are on the way.

Liberty is the US giant which bought Sean’s Quinn broken Quinn Insurance in late 2011. Paying €200m, it completed the purchase of the State’s stake in Quinn only two years ago.

Liberty said yesterday that it plans over the next 18 months to cut 270 jobs from its payroll of 950 in Dublin, Cavan and Enniskillen, after pulling out of the personal insurance market in Britain.

And it plans to eventually outsource its major Enniskillen call centre to a third-party. Liberty said it will now focus on the insurance market in the Republic with the Liberty brand.

It employs 370 people in Blanchardstown, 340 in Cavan, 245 in Enniskillen and seven people in London. Last year, it bought Hughes Insurance to sell into the North.

Liberty has characterised its woes in the British market as a “legacy issue” of the old Quinn Insurance.

However, a Liberty spokesman said the Irish insurance industry “has been slimming and the losses have been mounting”.

Analysts and industry figures argue that the woes of the industry are getting worse. They say that motor insurance prices which have already soared this year could rise further by a significant amount.

The industry has complained its profits are paper-thin or non-existent. The economic recovery has not yet boosted business sufficiently. More huge price hikes are necessary, they say. Motor insurance costs have been rising relentlessly month-by-month and are now hugely more expensive than this time last year.

While most items on the consumer price index fallen, CSO figures show that the cost of motor insurance is one of the few items that have soared.

Car insurance premiums have soared by an average 16.3% in the year, and home insurance has increased 3%.

However, Brian McNelis, director of general services at the industry group the Irish Brokers Association, yesterday warned more large rises are probably on the way.

“The consumer price index data unfortunately reflects what we have been signalling since the beginning of the year — motor rates have gone up significantly and will continue to do so — they may increase a further 25% by year end,” Mr McNelis said.

“Motor insurance continues to be unprofitable in the Irish market due to prices being pushed to artificially low levels by heightened competition. Much of this was driven by direct and online insurers, but increasing claims’ volumes, the cost of claims and insurance fraud are all playing a part,” he said.

The Central Bank warned earlier this month that the economic recovery had yet to boost the fortunes of the insurers significantly.

“Intense competition in difficult operating conditions has resulted in profitability concerns emerging in the non-life sector, with underwriting losses being reported among insurers in 2014 and profitability becoming increasingly reliant on investment returns,” the bank said in its Macro- Financial Report.