FBD is likely to raise the price of motor insurance this year by 10 per cent due to an increase in claims as economic activity continues to gather momentum, the company's chief executive Andrew Langford told The Irish Times yesterday.
An average increase of 5 per cent in motor premiums was pushed through in the first half of this year by FBD and Mr Langford expects this to rise to “roughly” 10 per cent by the year end. “We have further rate increases planned but we will do our best to keep them down,” he said, adding that some rivals have pushed through rises of up to 20 per cent.
He said this was due to increased economic activity, which has resulted in more cars on the roads, more congestion and accidents.
Mr Langford was speaking after FBD’s half-year results, which showed the insurer made a pretax profit of €3.3 million in the period to the end of June.
This was down from €19.1 million in the same period last year. This was in line with analysts’ forecasts following a profit warning by the company earlier this year and was in spite of a 5.1 per cent rise in gross written premiums to €184.9 million.
Underwriting loss
FBD incurred an underwriting loss of €10.9 million in the first half of this year, down from a profit of €7.7 million a year ago.
Mr Langford said the decline in profits reflected an increase in car claims and the costs of storms that battered Ireland earlier this year. The storms resulted in €44.3 million being paid out in claims by FBD to about 9,000 customers. Storm Darwin in mid-February cost it €30.4 million in claims, or €7.8 million net of reinsurance.
In spite of this adverse performance, Mr Langford said FBD would not be increasing the price of property insurance as the company factors into its calculations periodic adverse weather events.
Mr Langford said FBD was probably worse hit than its rivals here by storm damage given that so much of its customer base is in rural areas and agri related. Customers in Cork, Limerick, Tipperary and Kerry were worst affected by the storms.
New IT systems
FBD is also spending more than €20 million on new IT to systems to improve its back-office functions and enhance its customer documentation and business intelligence systems.
“It’s an investment well worth making,” Mr Langford said. “Especially if our competitors don’t make the same investment we will be able to be more responsive to customers.”
On the outlook for FBD, Mr Langford said: “On the positive side, it’s very likely that the Irish insurance market will grow by the end of the year, which would be first time in 12 years. That would be a positive development.”
