Claims rise drives up Aviva car premiums

Friday, 6th March 2009

HIBERNIAN Aviva yesterday said it expected to increase car insurance premiums by at least 7.5pc this year despite the deepening recession.

The insurance giant's chief executive Stuart Purdy made the comments as he revealed a 50pc collapse in the company's annual operating profits, to €181m (€203m).

The poorer result included a €40m hit for weather-related claims, a multi-million euro provision for redundancies and a "5pc to 7pc" fall in average premiums, Mr Purdy said.

Figures from UK parent company Aviva also showed the Irish division made losses of £4m on its core general and health insurance underwriting business last year, against profits of £101m in 2007.

Describing the result as "solid", Mr Purdy said increases in general insurance premiums were "needed" to deal with a 30pc rise in claims over the past year and significant falls in premiums over the past five years.

"We're seeing an increase in 'own damage' claims and we're seeing people claim for things they maybe wouldn't have claimed for before the downturn," said Mr Purdy.

Tough

Mr Purdy said he'd expect motor premiums to rise by "7.5pc to 10pc" this year. "We know times are tough for people but we have to make sure the rates match the risks," he said. "We can't afford not to put the rises through."

Yesterday's results show Hibernian Aviva's gross written premiums in Hibernian's general insurance business dropped almost 11pc to €638m last year. Mr Purdy said that included a fall of "between 5pc and 7pc" in average premiums, but said average motor premiums had risen during the year.

Premiums at Hibernian's life and pensions business dropped 27pc during the year to €1.62bn, based on the present value of new business premiums (PVNBP). The company's margin on new business dipped from 2.1pc to 1.2pc.

Parent company Aviva said the life insurance falls in Ireland came as "consumers were deterred by volatile equity markets and the slowdown in economic growth".

The general insurance falls in Ireland, meanwhile, were "driven by storms in July and August, intensive competitive pressure in the market and the Irish economy slipping into recession", the UK plc said.

The overall Irish result included a significant investment in new infrastructure needed for Hibernian Aviva's recently-adopted business model, which will see 450 backoffice roles moved to India.

Source: http://www.independent.ie/