There is great concern at present from both consumers and industry professionals about the insurance industry in Ireland.
Between flood and storm claims, rising premiums, key players and their subsidiaries experiencing financial difficulties and Government- and industry-backed incentives to insure particular age groups, the industry is in a state of flux.
Thirty years ago, the Insurance Corporation of Ireland, a subsidiary of Allied Irish Banks, collapsed due to under-reserving of open ended liabilities. It threatened the bank’s stability and was yet another episode exposing the fragile nature of the insurance market, following what had happened at PMPA only years before.
Industry players such as Setanta and RSA were recently under the glare of the media spotlight.
In health insurance, the industry has supported the Lifetime Community Rating initiative aimed at people in their early 30s.
The Government has effectively encouraged consumers to shop around for health insurance, which raises the question who benefits most: The insurers or consumers?
Price has become the main factor influencing consumers shopping around for both health and general insurance.
Industry professionals are aware of this and have adopted aggressive advertising campaigns and cross-selling incentives. Traditional variables such as the levels of service and breadth of cover have taken a back seat.
Since the recession, the industry has attracted new entrants such as tradesmen, architects, and fitness professionals.
Brokers have become magnets for these new breed of insurance professionals, who, at 25 years of age and older, bring to the table their previous career’s experiences and are able to adapt more quickly and progress than other new entrants.
Overall, the industry has been in a state of flux, as key players such as Liberty, Allianz, Zurich, and FBD vie for position.
According to Insurance Ireland, the industry body, 32% of insurance business in 2013 was private motor insurance. Other sectors include liability, fire and property damage, and health insurance make up the bulk of the rest of gross written premiums.
Private motor insurance has been driven by Irish legislation and EU directives. Call centres and the aggregator websites have grown as well.
Some industry professionals believe call centres have damaged the long-term prospects of the insurance industry.
They tend to focus on motor and home insurance and are known for their high turnover in staff.
There are still career paths open by means of the professional certificate and diploma qualifications.
The call centre has also created a generation of insurance practitioners who only know of business conducted through the medium of the call centre, whereas someone who has been in insurance for quite some time would have started their career writing business.
Looking to the future, the call centres offer low costs that outweigh some negative aspects. They will be a firm fixture on the insurance landscape for many years to come.
They are well placed to work alongside social media and online and digital marketing. As a profitable arm of an insurance company, they are the battleground in which the war over market share will be waged in years to come.
The costs of property and rents in Dublin will prompt many insurers to relocate outside the capital. We have already seen some high-profile insurers such as Zurich relocate their Personal Lines business to Wexford, and other companies will follow suit in the coming years in the relentless effort to cut costs.
Garrett Kelly has worked in the general insurance industry