Premium hikes on way after weather disasters

HOMEOWNERS could face premium hikes after insurance companies announced record pay-outs due to the devastating impact of floods and freezing temperatures last winter.

The country’s largest insurance company, Aviva Ireland, said it will pay out a record €100 million to 4,500 customers affected by the floods and freezing conditions.

That is the largest amount it has ever paid out in a 12-month period for weather-related events, raising fears that homeowners across the market may face premium hikes down the line as a result of increased pay-outs.

Axa Insurance also confirmed that its €16m pay-out for weather-related events, linked to the inclement weather, was also a record, with a spokesman revealing it had already directly led to a 40% increase in some cases for home insurance.

FBD Insurance will publish its half-yearly figures shortly but it too is likely to see an increase in pay-outs linked to the impact of the floods and plummeting temperatures of last winter.

Aviva Ireland boss Jim Dowdall said he is satisfied with the rate premiums are set at the moment, indicating that the company is not planning any premium hike in the coming months.

The company claims it has not changed its policy in relation to insuring people living in flood-prone areas, saying the same criteria for assessing those wishing to be insured are still in place.

However, those that did claim for weather-related incidents could see a hike in their premiums, with claims generally resulting in premiums increasing.

The €100m refers to the two incidents of flooding and freezing which occurred at the end of last year and beginning of this year.

The Irish Insurance Federation (IIF) has said that the two periods of severe winter weather were the two single most expensive weather losses in the history of the Irish market. It has estimated that total pay-outs from claims could hit €500m.

An IIF spokesperson said that while each individual company will have different levels of exposure if there is a rise in one area then typically the premiums usually follow.

A spokesman for Axa said while 15% of its book was home insurance, the bad weather had also impacted on motor insurance.

Its annual pay-out on weather-related events was also a record, and the spokesman for the company said it had already impacted on premiums and on the insurance firms’ longer term re-insurance costs.

Ciaran Phelan, head of the Irish Brokers Association, said: “The various weather anomalies of the last year have left both insurers and consumers alike out of pocket.

“Unfortunately, for those consumers who did not have the correct or appropriate level of cover in place, their purses had to bear the brunt of the bad weather.

“Thankfully, many others were compensated for their loss by Aviva and other insurers,” he said.

“There is no doubt that claims procedures in all areas have tightened significantly and this is something consumers need to be aware of.

“A broker can ensure people have adequate cover in place and, in the event of a claim, they will have the expertise to liaise with insurers on a person’s behalf to ensure a claim is dealt with efficiently and effectively.”

Earlier this year the Irish insurance industry said a planned review of how the European insurance market protects against flooding and other natural disasters could result in greater state involvement in cover against catastrophic weather events.