Pre-tax profit at insurance company FBD tumbled by almost 83% in the first half of the year as winter storms took their toll on the insurer’s business.
Adverse weather conditions, including Storm Darwin which battered the country in February, cost FBD €44m, arising from 9,000 claims. Similarly, storms last December resulted in 1,800 claims which cost €6.3m.
The recovery of the car sales market also resulted in more claims and hampered the company’s short-term profitability as a “time-lag” between the introduction of increased premiums and their effects persists.
Share price remained relatively flat yesterday however as these factors were flagged to the market in a June trading statement.
“These are robust results in a period significantly influenced by weather and an increase in claims frequency across the Irish car insurance market,” said FBD Group chief executive, Andrew Langford.
He indicated that customers can expect to pay more for car insurance as prices rise across the market, adding that figures recently released by the insurance industry showed that the market is underpriced.
“I think it is likely that there will be rises across the marketplace for car insurance... One other competitor noted recently that it applied a 20% increase to car insurance premiums.
“In the first six months of 2014, the average premium we charged customers for car insurance is 5% ahead of last year. It is likely that premiums will go up again and we have further modest increases planned for later on in the year for car insurance. The increases that we’re looking at making already in August and October will probably add up to less than 5%,” Mr Langford said.
He added that “no substantial changes” are planned to premiums for home or farm insurance.
In the first six months of the year, the company increased its market share — setting it on course to achieve its 12th year of market growth in the past 13 years, according to Mr Langford.
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