The Irish insurance market will continue to be loss making in 2015 and 2016, insurance group FBD said on Monday, noting that rates haven’t risen enough to offset a “significant deterioration” in the claims environment.
In an interim statement the insurer, which reported a first half loss of €96.4m in August, its worst result in 40 years, said that the Irish market continues to grow in 2015, “as insurers increase rates following market losses arising from the increased claims cost and frequency experienced as the economy improves”.
However it warned that profitability will be “challenging”, as the industry will continue to be loss making for 2015 and 2016.
“It remains FBD’s view that the market has not increased rates sufficiently to compensate for the significant deterioration in the claims environment,” the company said.
In the statement, FBD said that it continues to prioritise profitability over volume growth, pointing to a decline in policy volumes of 9.2 per cent year to date, offset by average rate increases of 9.1 per cent.
FBD, which is “focused on the insurance needs of its farm and direct business customers”, says there is evidence that market rates continue to harden for both car insurance and business insurance.
Despite a “challenging” operating environment, FBD’s financial services businesses are performing “broadly in line with expectation” the company said.
FBD said it now has capital “in excess” of its Solvency II capital requirement in advance of its effective date of 1 January 2016.
In August, FBD reported a loss for the first half of this year of € 96.4 million and announced a series of cost-saving measures. Some 100 voluntary redundancies form part of that cost-saving planFBD’s view that the market has not increased rates sufficiently to compensate for the significant deterioration in the claims environment,” the company.
