On 12 October, we held our third annual Motor Insurance Seminar. This event was well attended by representatives from the motor insurance 

Above: Pictured at the third annual Deloitte Motor Insurance Seminar were (from l-r): Dick Tulloch, Director, Actuarial Services, Deloitte, Brian Lenihan, T.D., Minister for Justice, Equality and Law Reform and Glenn Gillard, Partner, Financial Services, Deloitte.

industry. It proved to be a valuable opportunity for insurance professionals to meet and share views on the important factors in the Irish motor insurance market.

 Download the presentation slides here

This year’s speakers were:

• Brian Lenihan, TD, Minister of Justice, Equality & Law Reform, who spoke of the Government’s commitment to the importance of road safety and motor transport issues
• Glenn Gillard, Partner at Deloitte, who presented the results of our motor insurance survey and conducted an interactive question session with the audience on their views of the Irish motor insurance market
• Dick Tulloch, Director Actuarial Services at Deloitte, who presented the results of Deloitte’s analysis of the of the Insurance Statistical Review 2006 data and using that data and the results of the market survey made some predictions relating to the ‘real’ underwriting cycle of the Irish motor insurance market

Some analysis and results from the Seminar
Our detailed analysis of the Insurance Statistical Review (Blue Book) and Regulatory returns confirmed predictions made at our Seminar held in 2006 that the Underwriting Cycle had turned downwards. However, our survey indicated that competition in the market might mean that motor insurance premiums would still be under pressure to continue to decrease and that this could mean tougher times ahead for the motor insurance industry.

Our analysis of the Blue Book results showed that once again motor insurance companies released a significant amount of reserves - to the tune of approximately €300 million.  However, total profits from both underwriting and investments were reported as approximately €460 million. 

We once again concluded that a very significant proportion of the profits realised in 2006 came from both reserve releases from prior years and the investment income earned on those reserve releases.  The 2006 accident year is considerably less profitable than it first seems.

Optimism on Road Safety – premium rates to decrease
Our survey of motor insurance representatives attending the Deloitte seminar revealed that over 80% of Irish motor insurance companies said that their company decreased premiums in 2007, the majority by up to 10%. Less than one in ten respondents said premiums had increased.

Opinions in the motor insurance industry on the outlook for premiums in 2008 are mixed. Over 40% of respondents believed that premiums would increase by 0-10%. However, an additional 40% also predicted that premiums would decrease by 0-10%.

The market pressures on motor insurance companies are such that the consumer still has the stronger hand in a competitive market place even though profitability may be falling. These consumer pressures, the continued expectation of improved road safety and the continued high level of competition are all forcing motor insurance companies to compete harder for business. Ultimately, as we are continuing to see, this will make it more difficult for companies to raise price to protect their profit levels and consumers are not yet prepared to accept price increases.

Over 70% of respondents believed the Personal Injuries Assessment Board (PIAB) was having a positive impact on compensation culture. In addition, over 70% were more optimistic about road safety, up from 56% last year. Similarly, over 60% of respondents believed that the standard of driver behaviour has improved over the last 12 months.

Tougher times ahead
However, the combination of decreasing premiums with a static average cost per claim and a modestly increasing claims frequency predicted by Deloitte will continue to drive the downward curve of the underlying cycle. This should lead to lower level of profits among the country’s motor insurers over the next few years.

If you have any questions about this event please contact us.

 Download the presentation slides here

 Read the press release here