Insurance body says cost hikes due to personal injuries

THE Irish Insurance Federation (IIF) has moved to explain the spiralling costs of premiums saying a significant hike in personal injury damages is putting pressure on costs.

It said Ireland has higher compensation levels for personal injury than most other countries and these differences have to be reflected in the cost of motor and liability insurance.

“Any significant upward movement in claims costs has to be reflected in the premiums that make up the lion’s share of insurers’ income – even more so now when investment returns are low or even negative,” said IIF president, Brian Forrester.

The IIF has called for government action in the industry as new figures show life and pension business was down 46% in the first three months of the year.

Newly elected Mr Forrester said with the recession having impacted on the insurance sector, strong leadership from Government and the Financial Regulator is needed to reform the financial services industry.

“We are now in a position in the life and pensions sector where new investment business has effectively dried up, asset values have been slashed beyond all previous predictions and margins are so tight and the prospects so bleak that our member companies’ very futures are at stake,” he said.

Last year new business dropped nearly 29% from 2007 and figures for the first quarter of 2009 show it is down a further 46%.