Insurance profits decline by 10%

THE combined profits of insurance companies in Ireland declined by 10% to just under €720 million last year.

The slippage was caused by a sharp fall in profits made from underwriting motor insurance, which dropped from €418m in 2005 to €258.7m in 2006.

Motor insurance represents the largest contributor to the industry in both premium income and profits.

The figures, contained in the Financial Regulator’s annual Insurance Statistical Review, reflects anecdotal evidence that while motor premiums have declined in the last few years this has not been matched by a corresponding drop in the cost of settling claims resulting in the lower profits.

According to the figures, the majority of profits from underwriting motor insurance was made by just three firms, Quinn Direct, Hibernian and Allianz. Quinn Direct made a profit of €75.8m, up from €61.4m in 2005; Hibernian made profits of €60.7m and Allianz profits of €46.7m.

Premium income generated by motor insurance was flat year-on-year at €1.6 billion, though it was still the largest source of income, at 40% of all insurance premiums written in 2006.

The report also shows that the outstanding number of claims against uninsured drivers has fallen year-on-year.

A total of 3,547 cases still had to be settled by the Motor Insurers Bureau of Ireland (MIBI) were outstanding at the beginning of the year. A further 1,928 cases were added in 2006 and 2,270 settled during the year. That left 3,205 cases to be settled. A total of €377m has been provided to settle these cases.

Accident and health insurers saw a combined loss of €1.9m in 2006 compared with profits of almost €40m in 2005. These figures, which do not include the VHI, as it is not regulated by the Financial Regulator, reflect loss of €24m at BUPA in 2006 against an underwriting profit of €11.6m in 2005. Vivas, the Dermot Desmond-backed health insurer, made an underwriting profit of almost €2m last year.

The Insurance Statistical Review also reveals that the profits made by insurers on their investments dropped by 7% to €390.9m in 2006.