Reforms unlikely to lower car insurance

MOTORISTS have little hope of cheaper car insurance in the years ahead, a top insurer has warned.

However FBD Insurance expects the cost of employer and personal liability cover to stabilise.

Philip Fitzsimons, deputy chief executive, FBD, warned that cost of motor cover would continue to soar if the claims culture doesn’t change.

The insurance group called into question the potential impact of the Personal Injuries Assessment Board and the forecast of Tánaiste, Mary Harney, that the cost of cover could be reduced by 31% if the PIAB and other measures are introduced.

Up to 10% of the cut is contingent on a major fall in the number of motor accidents; a 5% fall in the number of uninsured drivers. A further 7.6% of the 31% reduction is linked to the presumed success of the PIAB, said Mr Fitzsimons.

“These are big assumptions” given our recent history, he said.

Paul O’Callaghan, chief executive, FBD, said his company was also concerned that the PIAB has already said it was not interested in cutting the level of awards made to injured parties.

“For the record FBD does not make money out of car insurance,” he said.

Why stay in it?

Because it is the link to other revenue streams within the sector in which FBD is active, he said.

FBD is part owned by the Belgian group KBC which either directly or indirectly has about 33% of the equity.

Irish farmers hold 40% of the equity and have the controlling interest because KBC’s direct stake is just 20%.

Just under 30% of the stock is traded openly.

FBD met the press yesterday to celebrate the recent opening of its new head office off the Naas Road in Dublin.

In its briefing to the media it highlighted the “cost of claims” as the single biggest issue facing the motor insurance sector now and into the future.

And the senior executive team was adamant that unless serious progress is made in that regard the cost of cover will continue rising.

FBD raised its cost of cover by up to 18% last year. It was more optimistic however in the case of employer and personal liability cover. FBD thinks that sector has peaked.

Over the past 12 months it increased its Employer Liability and Personal Liability cover by 30% on average.