23/10/2008

Insurance Premiums To Rise By 10%

A leading consultancy firm has said car owners should expect to see car insurance premiums jolt upwards by up to 10%.

In their annual Motor Insurance Survey, Deloitte said nearly 90% of Irish motor insurance companies said that they expect to increase premiums in 2009. Just under half of insurers said they expected an increase of up to 5%, with another 42% expecting increases of between 5% and 10%.

Deloitte said their statistical review showed that overall, the motor insurance companies showed an increase in profitability, although much of this was from a continued release of reserves from prior years.

The consultancy firm further claimed it may not be easy for motor insurance companies to implement the desired premium increases as there are a number of factors causing a downward pressure on rates, including a still very competitive market and the continued fall in levels of road deaths and injuries, together with the possibility of a continued recession into 2009.

Dick Tulloch, Director at Deloitte Ireland, said: "Motor Insurance companies are facing a push/pull situation – on one hand, as competition in the market remains intense companies are coming under pressure to reduce costs.

"On the other, reduced margins in current premiums are creating pressure to increase premium rates. What's clear is that motor insurance companies will need to be extremely careful when deciding upon their pricing strategy as a loss of market share is the very probable result of getting it wrong."

The Deloitte Motor Insurance survey was completed by representatives of all levels from 90% of motor insurance companies in Ireland.

(DW)

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