Insurance prices will rise by between 5 and 10 per cent "across the board" this year, according to Allianz Church and General chief executive Mr John O'Hanlon.
Price increases are necessary because of inflation of close to 5 per cent as well as poor underwriting experience in the motor and liability business over the whole insurance market, he warned.
Allianz yesterday reported a 127 per cent jump in profits to €46 million (£36.2 million) for 1999. Price increases and more careful selection of business helped the general insurer's performance.
On motor insurance - Allianz has about 15 per cent of the market and this sector accounts for 43 per cent of its business - Mr O'Hanlon called for greater awareness of the risks caused by inexperienced drivers. He called for more control of access to cars and fundamental testing of on and off-the-road knowledge of drivers before provisional licences were granted.
Profit growth at Allianz came from a halving of underwriting losses to €34.7 million (£27.3 million). Underwriting losses arise when claims and costs exceed premium income. Allianz losses were reduced through improved risk selection, more appropriate pricing policies and because there were no serious storms or weather-related claims in 1999, Mr O'Hanlon said.
In a lower interest-rate environment, investment income fell to €81 million from €91.3 million. Mr O'Hanlon said insurers needed to achieve "a more sustainable equilibrium between insurance and financial earnings" which would only come through "more discipline in risk acceptance and pricing".
While consolidation was bringing more discipline to the market, he said, there was still room for price increases ahead of the rate of inflation.
Gross premium income at Allianz was 14 per cent ahead at €444.1 million (£349.8 million), but the increase came mainly from the takeover at the beginning of 1999 of the business of Cornhill Insurance. Mr O'Hanlon commented that Allianz could have taken on much more business if its aim was to increase premium income.
"But we were much more choosy about the business we wrote last year and we will continue to be," he said.
Allianz Church and General has 850 employees in Ireland. It is 66.3 per cent owned by German insurer Allianz and 30.4 per cent by Irish Life and Permanent.
