10th September 2010: The Irish Insurance Federation (IIF) announces the launch of its 18th annual market statistical publication Factfile. Factfile covers the non-life and life/pensions insurance markets’ 2009 results in detail and provides an overview of 5-year trends for 2005-2009.
Gross Irish premium income for life and non-life insurance combined was €12,470m in 2009, compared to €13,431m in 2008 - a fall of 7.1%. However, insurance remains an important part of the economy with premium income as a percentage of GDP at 7.5%.
In the non-life market claims costs increased from €2,342m to €2,584m leading to an increase in the claims ratio from 70% to 80%. Although expenses and commission costs came down the increase in claims costs outweighed the impact of improved efficiency. Consequently the market made an aggregate underwriting loss of €179m, compared with a profit of €94m in 2008. Net operating profit (after addition of investment income) was €135m in 2009, down 40% from €228m in 2008. Over the 5 years from 2005 to 2009 operating profit has declined by 89%.
Mike Kemp, Chief Executive, IIF said, ‘Although the industry became more efficient, as demonstrated by the reduction in management expenses, unfortunately the increase in claims costs more than outweighed these savings and as a result the net operating ratio took the market into the red, increasing from 98% to 107%’.
In the property insurance market (commercial and household) the contraction in the economy and falling values at risk (sums insured) resulted in a reduction of 3.4% in gross premiums to €945m. However, claims costs rose by 10% to €895m, including an estimated €245m for claims arising from the November floods. The 2009 claims figure does not take account of the majority of claims costs arising from the freeze in December 2009/January 2010 which are estimated at €297m.
Motor insurance - the largest class of non-life business – incurred a net underwriting loss of €8m in 2009. This is the first underwriting loss in the motor insurance market since 2001. Although net claims costs reduced by 4.3% in 2009, earned premium fell by 6.7%. After taking into account investment income, the net operating result for motor insurance was a profit of €143m (10.7% of gross premiums).
Liability gross written premium amounted to €532m in 2009, down 10.9% on 2008. Net earned premium fell by 12.3% to €499m. However, net claims costs increased by 46.8% to €354m. Consequently, the net underwriting profit in liability reduced significantly to €17m from €180m in 2008.
Commenting on the figures Mr Kemp said ‘Although the underwriting environment was very difficult in 2009, particularly in the home insurance market, the financial impact on insurers was alleviated by rate adjustments and by a significant increase in investment income. Whilst the economic crisis has had a significant effect on our sector, the market figures for 2009 demonstrate the financial strength and resilience of the non-life insurance industry in Ireland.’
In the life assurance and pensions market premium income was down 7.4% in 2009, at €9.35bn. New Business APE (Annual Premium Equivalent) was just over €1.15bn. Benefits and claims paid in 2009 were €8.58bn. (down 1.3% on 2008 but up 75% over 5 years). The total value of life assurance protection in force at the end of 2009 rose by 4.5% to top €400bn for the first time. The total value of assets (policyholders’ funds) was up 10% to just over €70bn at the end of 2009.
Recent market research* conducted on behalf of the IIF showed that the majority of people surveyed (72% in favour vs. 4% against) wanted Government to retain tax relief on private pension contributions.
Factfile 2010 will be available as a web only publication.
ENDS
*Research carried out by Millward Brown Lansdowne in July 2010.
For further information please contact:
Jane O’Driscoll, PR and Communications Manager, IIF: Tel: 6447781/ 087 9795369
email: jane.odriscoll@iif.ie
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