The chief executive of FBD has urged the Government to act on its own extensive report into the insurance industry and bring forward legislation that would help rein in the costs of claims.
Unveiling profits for the first time since the industry was enveloped by crisis, Fiona Muldoon nonetheless indicated there was no guarantee that the costs of injury claims wouldn’t continue to climb, in the absence of government action.
A repor, published last month and commissioned by Financial Services Minister Eoghan Murphy in response to the huge rise in insurance premiums, helped underpin arguments made by the industry about high awards for injuries. Ms Muldoon said the minister needed to prioritise what she said was the report’s “33 recommendations and 71 action points” and legislate to ensure that costs of claims were reduced.
She wants the Government to prepare legislation to include the proposal for a Personal Injuries Commission and implement a recommendation to give powers that would allow for the automatic checking of car licence plates to detect uninsured drivers.
The turnaround for FBD to pre-profits of €11.4m was helped by the “lucky” outcome of benign weather that boosted its property insurance business even as overall gross premiums contracted slightly, to almost €362m, Ms Muldoon said.
“We are turning a corner definitely and we do seem to have got there a little bit earlier than anticipated,” she said.
However, motor insurance continued to face difficulties, while small businesses including owners of restaurants and pubs face elevated levels of costs of injury claims, she said. Shares in the FBD had collapsed from €19 three years ago as the insurer, along with rivals, plunged into underwriting losses. Insurance premiums have since soared.
Ms Muldoon said FBD reaction to the crisis to focus on its core business of farmers, SMEs and hoteliers, had paid off. “What we are seeing emerge in profitability terms is a return to that core”, she said, though the company was also going back to urban centres in Cork, Dublin and Galway, as it sought a larger share of the home insurance market. The shares, which have risen by over 25% since the start of the year, fell 2% to €8.01 at one stage yesterday.
Ms Muldoon said any board discussion on resuming a dividend payment would probably not start until this time next year. In 2015, Canada’s Fairfax International injected €70m in a convertible bond into FBD as part of the insurer’s recapitalisation. The bond can convert into equity, at the earliest of September 2018, if the share price reaches €8.50.
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