Aviva blames the motor insurance levy for a fall in profits

Insurance company Aviva blamed the government’’s 2% motor insurance levy for a fall in profits to €54m in Ireland last year.

The figure is a 16% reduction on €64.6m recorded in 2018. The company also said a 2% fall in earned premiums led to the fall in profits and the reductions were partly offset by lower large losses and more benign weather in Ireland last year.

The motor insurance levy was introduced in December 2018 on all personal, fleet and commercial motor insurance and is used to fund a motor insurers insolvency compensation fund.

The wider Aviva group, which offers life and general insurance in the UK, Europe, Canada and Asia saw operating profit rise 6% to a record €3.7 billion.

The company said it would pay a dividend of 30.9 pence per share, up 3% and in line with forecasts.

The insurer said it has already received around 500 travel insurance claims related to the coronavirus so far and paid out more than €500,000.

Aviva’’s new chief executive Maurice Tulloch said the coronavirus epidemic “presents a new uncertainty in 2020”.

It’s early days yet, and certainly there’s an awful lot of global uncertainty around it. And our customers expect us to be open, whether it’s raining or it’s pouring, whether you’re dealing with global situations like that.

Aviva’’s Irish operation in the life insurance section saw operating profit jump by 49% to €68m mainly driven by the purchase in 2018 of Friends First.

The Group also operates a number of defined benefit and defined contribution pension schemes in the UK, Ireland and Canada.

In Ireland, the value of Aviva’’s defined benefit obligation was €1.19bn while assets were €961m resulting in a €233m deficit.