Car insurance firms increase profits by 26%

Motor insurance company profits increased by 26 per cent to €418 million in 2005, a report by the Irish Financial Services Regulatory Authority shows.

The annual study of the insurance business in Ireland, formerly known as the "blue book", reveals that motor insurers pocketed €88 million more in profits than they did in 2004.

The cost of claims for commercial and private motor insurance fell 16 per cent from €1.1 billion in 2004 to €920 million in 2005.

But the total value of the motor premiums charged to consumers fell just 1.8 per cent to €1.57 billion.

Overall, insurance companies made a net underwriting profit of €802 million in 2005 in relation to Irish risk business, a 16 per cent increase on the €689 million profit achieved in 2004.

The total gross premium income received by insurers in Ireland came to more than €31 billion, a 16.5 per cent increase on 2004. Of the total, almost €24 billion was generated by life companies - a 23 per cent increase on 2004.

Despite the healthy year for the life sector, non-life companies' net premium income decreased 1 per cent, compared to 2004.

With the exception of accident and health insurance, all categories of non-life Irish risk insurance wrote less business in 2005 than they did in 2004.

Gross written premiums in the Irish risk accident and health category increased 8.5 per cent to €380 million, indicating that this is a growing market in the Republic. However, Vivas Health, the health insurer that launched in October 2003, recorded an underwriting loss of €3.6 million, despite earning premium income of €6.87 million - a significant increase on the €398,000 earned in its first full year of operation in 2004.

A spokesman for the company said it was delighted with the growth in its business since the launch and that its losses could be explained by its heavy investment in the healthcare industry.

The cost of claims at the insurer in 2005 amounted to €1.9 million. Figures for the State-owned VHI and the British-owned Bupa are not included in the report.

Decare, the US dental insurer that sells a dental insurance product in association with the VHI, earned premium income of €1.2 million last year but made an underwriting loss of €242,000.

In relation to property cover, insurers made underwriting profits of €245 million in 2005, while liability profits amounted to €63.8 million.

Among the motor insurers, Hibernian General recorded the highest underwriting profit at more than €91 million, followed by AXA with profits of €84 million.

Quinn Direct, which sells cheap, no-frills motor policies, was in third place with underwriting profits of €61 million.

The Irish Insurance Federation (IIF) said motor premiums had dropped by an average of 45 per cent over the past three years, according to its research. Motor premiums are now back down to 1992 levels, it said.