FBD projects more insurance premium hikes

Consumers already hit with huge insurance increases in the past 12 months could be facing further premium hikes, according to one of the country’s most prominent insurers.

FBD, which earlier this year flagged premium increases of up to 12% as it posted losses of more than €96m, is predicting another market-wide price jump in the coming months.

In its interim management statement, the Irish-owned insurer said that the market has not increased rates sufficiently to compensate for the significant deterioration in the claims environment.

The group’s policy volumes have declined 9.2% in the year to date, offset by average rate increases of 9.1%.

FBD also predicts the industry will continue to be loss-making this year and next.

Further increases would be a tough pill for consumers to swallow, with insurance costs already up by more than 8% in the past year.

In an interim management statement, FBD Holdings said it would continue to prioritise profitability over growth. https://t.co/JGqQHfxuL0

— RTÉ Business (@RTEbusiness) November 16, 2015

Home insurance has climbed by close to 6.5% in that time with motor insurance premiums spiralling by 30% in the past 12 months.

Despite the company’s poor set of results in August, yesterday’s financial update provided some positive indicators, with progress made on cost savings and its underwriting actions.

FBD said its underwriting actions over the past 18 months have had a positive effect, with improvements in claims frequency despite the increased level of activity in the wider economy.

It warned, however, that the improvement in attritional claims has been offset by an increase in the number of large claims it has had to deal with.

It reiterated that the claims environment remains challenging but has been in line with FBD’s expectations in the past few months.

FBD said it continues to prioritise profitability over growth and will continue its focus on the insurance needs of its farm and direct business customers as well as consumer customers.

FBD’s statement also indicates an improvement in the company’s capital position, which has been aided by a €70m investment from Fairfax Financial Holdings which was announced in September.

It has agreed to close its defined benefit scheme to future accrual, while the proceeds of the sale of its property and leisure joint venture will be injected into the insurance business by way of fresh equity capital.