Insurance costs, particularly motor premiums, are likely to rise this year as the sector struggles with rising claims and falling operating profits.
The Irish Insurance Federation's (IIF) annual Factfile survey for 2008, showed gross insurance premium income fell by 26 per cent to €13.4 billion, with the group saying this trend has been maintained in 2009.
Last year the Irish Insurance Federation's 22 domestic non-life members, which account for 95 per cent of the Irish market, saw their net underwriting profit drop 79 per cent to €228 million.
The value of gross premiums written by non-life members declined by 7.7 per cent to €3.33 billion, while the number of new claims rose to 605,883, up 14 per cent.
The IIF said 53 per cent of the new claims were car insurance while 32 per cent related to property insurance, partly due to the storms last August.
IIF chief executive Mike Kemp said the global recession and "aggravating local factors have made the business environment difficult for insurers and their customers".
He said the life assurance business, particularly on the investment side, suffered a significant downturn last year.
Car insurance costs have started rising again Mr Kemp said, adding premiums had risen 7.3 per cent from January to June 2009, but said remained at 67.4 per cent of their peak April 2002 levels.
Gross written motor insurance premiums fell 8 per cent last year to €1.42 billion with claims rising 5.3 per cent. The net underwriting result was €20 million, down 94 per cent on 2007.
Mr Kemp said insurance claims traditionally increased during a recession and opportunistic claims
"There tend to be increases in claims during a recession, and some of that tends to be legitimate as people claim for things they are entitled to but wouldn't have bothered to claim for in better times.
"There is also the possibility that people at the margins are tempted to make opportunistic claims involving exaggeration or fraud. Anecdotally there has been a slight increase in exaggerated and fraudulent claims but I don't think it is significant yet any everyone is keeping a close watch on it," he said.
Mr Kemp added that the business model of the insurance sector was fundamentally different to banks and "as a result our market has survived the rigours of the financial crisis in good shape so far."
