Royal & Sun Alliance has announced it will cut premiums for Irish motorists. Customers will see premiums fall, on average, by 7.5 per cent from the beginning of August, said the company, which held out the prospect of further cuts.
A spokesman for the company said the insurance environment in Ireland was healthier now than it had been for some time.
"Penalty points are just one component of the improvement in motor performance," said Mr Pat Nally, citing improved driver awareness of the danger of fraudulent claims, "but if the trend continues, we could see further cuts in the second half of the year."
Royal & Sun Alliance's Irish operations made an underwriting profit in the first three months of the year, helping the group report first-quarter profits at the top of end of market expectations yesterday.
The British insurer, forced to sell assets and raise capital to overcome a cash shortage, posted pre-tax profits of £175 million sterling (€245 million) for the period, up 6 per cent from a year earlier.
It also said its combined ratio - costs as a percentage of premium income - was 99 per cent in its general insurance business, putting it into profit and well ahead of its rivals, which are on combined ratios of around 102-104. In the Europe, Middle East and Asia region, which includes Ireland, the ratio fell 11 points on the same period a year earlier to 93.7 per cent.
The performance in Ireland was boosted by the absence of a repeat of the floods that left Royal & Sun Alliance bearing an €11 million bill in the early part of last year.
The company has also seen a more positive climate in the liability sector in Ireland. Claims frequency has fallen but the cost of claims is still a problem, according to the company, especially in the area of personal injury.
"It was a solid performance," said Mr Nally, "but there is more work to do, particularly on the part of the Government, in widening the penalty points sytem and introducing initiatives to tackle fraudulent claims and the cost of processing claims."
The parent company cautioned its bruised investors against taking too much heart from the result. Chief executive Mr Andy Haste said: "We cannot look at one good quarter in isolation, particularly when it has also benefited from strong results from operations that we have already disposed of in 2003."
British insurers have struggled in recent years as the worst bear market in a generation has undermined the investments they usually rely upon to turn a profit. - (Additional reporting, Reuters)
