Any one of the major Irish banks makes 10 times the annual profit of the entire insurance industry in Ireland in any one month, a leading insurance chief executive has claimed.
Mr John O'Neill, chief executive of insurance group AXA Ireland, maintained profit on the total of Irish premiums each year is only 4-5 per cent. No other industry could stay in business on the basis of such profit margins, said Mr O'Neill. But he added that insurers would never get a sainthood from the public because they were selling a service that people did not like paying for.
At the Irish Brokers' Association's annual meeting in Galway yesterday Mr O'Neill said the recommendations of the Motor Insurance Advisory Board report (MIAB), published this week, highlighted the industry's need to move as quickly as possible towards transparency and "to keep telling people like it is".
The MIAB report showed that Irish insurance firms made total profits of £343 million (€434 million) from 1983 to 1999 compared to profits of £30 million in the UK, despite the difference in relative market size.
However Mr O'Neill said this broke down into an annual profit of about £20 million for the entire Irish insurance industry over the 17-year period equal to the profit that any one of the major Irish banks makes every month.
Mr O'Neill said the last two years were two of the most unprofitable in the UK insurance industry with premium increases of 40-50 per cent but this year, they had already started to reduce premiums before any profits had fed through. Regarding the overcharging of young female drivers highlighted by the MIAB report, he said that for some years the data for young drivers had not been properly analysed with the result that all young drivers were grouped together and charged high premiums even though young male drivers were a much higher risk group. But he said Irish businesses had already moved on from the years that the data in the MIAB report was taken and over time, most of the 67 recommendations outlined in the report would be taken on board because they made good business sense.
"The attention grabbing headline issues are only touching the surface of this report and there are a lot of good things in it that we need to spend time on, particularly the education of young drivers. At the end of the day, the premiums charged relate to the total of the cost of claims so to reduce premiums, we need to reduce the number and severity of claims," he argued.
Mr O'Neill said driver training should be introduced into the second level curriculum as a subject, adding that one of the highest claim areas in this State was single vehicle accidents involving single male drivers, often driving their parents cars. The condition of the roads in Ireland was another issue that badly needed to be addressed, he said, particularly regarding poor signage at roundabouts and intersections as most claims resulted from minor accidents.
The recommendations of the MIAB report have been welcomed by IBA chief executive Mr Paul Lynch and the association's newly-elected president, Mr Pat Treacy.
Mr Treacy said it was essential the report's recommendations be implemented.
