Insurance companies last night faced calls to lower motor premiums immediately after revealing profits of €183.2 million for last year - wiping out practically all the industry's losses in the previous three years.
The 12 companies operating in the Irish motor market made an underwriting profit for the first time in 20 years - bringing in €18.2 million more in premiums than they paid out in claims and expenses. Investment gains boosted profits to €183.2 million at a time when customers are facing sharply higher insurance costs.
The figures drew immediate criticism from the Opposition.
Fine Gael enterprise, trade and employment spokesman, Mr Phil Hogan, said the figures "proved what most policyholders already believed to be the case; that they have been overcharged".
Labour's Mr Brendan Howlin said: "There is now a compelling moral case to say in the next few days that they will pass on a significant amount of this profit immediately to customers who have been overcompensating for the changed circumstances of the last few years.
"To recoup three years of losses in one year on the back of a vulnerable insurance market is unbelievable."
There was no immediate comment from the Government, although sources said the sector's return to profitability should encourage more competition in the market in line with Government policy.
The Irish Insurance Federation (IIF), which published the figures yesterday, acknowledged that they showed a "healthy profit" which "balanced out previous years' losses".
It attributed the better performance to a fall-off in the levels of awards last year, partly due to the courts not compensating for the lower value of the euro, and partly due to fewer claims.
It said the introduction of the penalty points system in November 2002 also helped, although chief executive Mr Michael Kemp expressed concern about the recent rise in the number of road fatalities.
The IIF said several leading insurers had passed on substantial cuts in premiums already this year, with the costs to customers falling by an average of 6 per cent.
Royal & Sun Alliance cut rates by 7.5 per cent from yesterday, and held out the prospect of further moves as the year progressed.
Mr Kemp said the cuts in premiums had been achieved "without a lot of help from the recommendations outlined in the MIAB [Motor Insurance Advisory Board\] report".
He said the industry hoped to do better than a 6 per cent cut in the next 12 months. However, until the key recommendations of the report were implemented to cut costs, "we will still pay more for motor insurance in Ireland than elsewhere in Europe". Further action was needed on road safety, the setting up of the Personal Injuries Assessment Board, the enactment of legislation promised by the Minister for Justice, Mr McDowell, to tackle legal costs and fraud, and greater consistency in awards.
Mr Kemp said losses in previous years had seen overseas-based parent companies put "pressure on established groups to take their capital elsewhere rather than leave it in the unprofitable Irish market". It had also discouraged new entrants from joining the market.
Despite last year's profits, Mr Kemp said the industry's return on capital in Ireland over the past five years was well below that of less risky forms of investment.
The IIF figures come a week before a report from the Oireachtas Joint Committee on Enterprise and Small Business which has been examining reform of the insurance industry.
