FBD premiums to rise due to floods

FBD, the country’s second largest general insurer, has warned that increases of up to 10% for some general insurance products are on the cards due to the rising cost of claims.

FBD said it was hit with a bill of €28 million following the bad weather from November through to the New Year.

The total cost of claims over the period was substantially higher than the €330m incurred across the previous 10 years, FBD said.

Chief executive Andrew Langford said he expected the average cost of car insurance to go up by 3%, but new entrants to the group’s scheme would face stiffer increases on their premiums.

Last week the industry in general warned of a 20% hike in the cost of insurance after the disastrous weather when flooding and snow left vast swathes of the country covered by severe flooding.

Mr Langford said he did not expect the hike imposed by FBD to be anything close to that level of increase for new premiums in the current year.

The lessons from the flooding were clear and he said that the state should spend €550m in flood prevention to ensure the experiences of the past few months are never repeated.

Adrian Taheny, marketing director of FBD, said the steps taken by the town of Mallow, Co Cork, where the group has an office was a good example of how well designed flood prevention measures will protect the town’s residents in the event of further flooding.

The group which has four hotels in Ireland including the Castleknock Golf & Country Club close to the Phoenix Park, Dublin, should offer incentives to entice hotel owners out of the market, he said.

One way of achieving that end “would be to allow them to retain the tax breaks that got them involved in the sector in the first instance,” he said.

An estimated 15,000 hotel rooms are excess capacity and that is equivalent to 25% of the 60,000 capacity in the market at present.

In his review of the year in which the group made an operating profit of €28.9m down sharply on the previous year’s figure of€65.7m the chief executive said: “FBD delivered a solid operational performance in what was a challenging year for both the insurance industry and Ireland’s economy.”

2009 was a year of lower premium income activity due to the depressed state of the economy and due to FBD’s decision not to grow volume in certain areas at “uneconomic rates”.

The group is to pay a net dividend of 30 cent a share against 40c in 2008. Shares in the group were virtually unchanged at €5.60 by close of business in Dublin.