MOTOR INSURANCE companies have warned of further hikes in premiums next year as profits slump and the number of claims rises.
Over 85 per cent of motor insurers plan to increase premiums next year, according to the annual survey of the industry by Deloitte. Half say they will put up premiums by 5-10 per cent and almost one-fifth predict a rise of over 10 per cent.
This comes on top of substantial increases in the cost of motor cover over the past year. According to the CSO, premiums have risen by 14 per cent even as deflation affects many other areas of the economy.
Most insurers expect the frequency of claims to increase as the recession continues, according to the survey, and also predict a further increase in the incidence of uninsured driving and fraudulent claims.
While improvements in road safety are helping to limit the increase in premiums, the insurance companies say these downward pressures on claims costs could be increased by the widespread introduction of speed cameras.
Motor insurers saw their profits drop sharply to €35.1 million last year, just under a tenth of what they were in 2007, according to the Insurance Statistical Review published by the Financial Regulator. Premium income fell 6 per cent to €1.39 billion and the cost of claims climbed 22 per cent to €1.088 billion.
The survey also reveals a big increase in the number of consumers using the internet to pay for policies and switch insurers. It says this is likely to lead to significant changes in market shares between the main companies.
“While consumers may baulk at premium increases, it is very likely that insurance companies will pass on the rising cost of claims to customers,” commented Glenn Gillard of Deloitte.