• Analysis shows lower profitability in 2005 accident year
• Optimism for improvements in road safety and driving standards
• Premium rates will continue to decrease
• Tougher times ahead for motor insurers

Analysis of the Insurance Statistical Review (Blue Book) and IFSRA returns shows lower profitability for motor insurance companies in the 2005 accident year. In addition, current market sentiment indicates that motor insurance premiums are likely to continue to decrease in the coming year, signalling tougher times ahead for the motor insurance industry, according to Dick Tulloch, Director in Deloitte’s Actuarial Services department.

Speaking at the second annual Deloitte motor insurance seminar in Dublin today, Tulloch said that although much attention has been focussed on the recent results of the Blue Book and the very healthy profits enjoyed by motor insurance companies, a closer look at the figures reveals that the industry may not be performing as well as first thought. The recent results from the Blue Book may not reflect the underwriting performance of the industry in the accident year 2005.

Gary Dunne, Manager in Deloitte’s Actuarial Services department, said, “Analysing the recent Blue Book results we see that motor insurance companies have released a significant amount of reserves - to the tune of approximately €350 million. With total profits from both underwriting and investments reported at approximately €650 million, we see an inflated picture of the current profitability of the industry.”

Optimism on Road Safety – premium rates to decrease

A survey of motor insurance representatives attending the Deloitte seminar revealed that 57 per cent believe that their companies will decrease premiums by between 0-10 per cent in the coming year, and 52 per cent think the standard of driving will improve. Similarly, 57 per cent of respondents are more optimistic about road safety.

“There is a subtle shift currently being experienced by motor insurance companies. Consumer pressures, the expectation of improved road safety and the threat of competition from new entrants are all forcing motor insurance companies to compete harder for business. Ultimately, as we are continuing to see, this will translate into price decreases for the consumer,” commented Dick Tulloch.

“Moreover, almost 70 per cent of respondents now believe that the Personal Injuries Assessment Board (PIAB) is having a positive impact on the ‘compensation culture’. All these factors mean a good news story for the customer who will be paying a lower price for their motor insurance,” he said.

Tougher times ahead

Tulloch concluded by saying that although the feeling of the motor insurance industry is that both the standard of driving and general road safety will improve, there is an upward trend in the average cost of claims and this, combined with falling premiums, will reduce the level of future profits of the country’s motor insurers. “There could be tougher times ahead for the motor insurance industry,” he commented.

Deloitte’s annual motor insurance seminar addresses the challenge and trends in the current motor insurance climate and was attended by representatives, of all levels, from motor insurance companies in Ireland, and also representatives from insurers in the UK.
- ENDS -

Notes to Editor:

About Deloitte

In Ireland, Deloitte is among the nation’s leading professional service firms, providing audit, tax, consulting and
financial advisory services through nearly 875 people in Dublin, Cork and Limerick. Known as an employer of choice for
innovative human resources programmes, it is dedicated to helping its clients and its people excel. “Deloitte” refers to
Deloitte & Touche and any associated partnerships and companies established under the laws of Ireland. Deloitte is the
Irish member firm of Deloitte Touche Tohmatsu. For more information, please visit the Irish member firm’s website at
www.deloitte.com/ie.

Deloitte refers to one or more of Deloitte Touche Tohmatsu, a Swiss Verein, its member firms, and their respective
subsidiaries and affiliates. Deloitte Touche Tohmatsu is an organization of member firms around the world devoted to
excellence in providing professional services and advice, focused on client service through a global strategy executed
locally in nearly 150 countries. With access to the deep intellectual capital of approximately 135,000 people worldwide,
Deloitte delivers services in four professional areas—audit, tax, consulting and financial advisory services—and serves
more than one-half of the world’s largest companies, as well as large national enterprises, public institutions, locally
important clients, and successful, fast-growing global growth companies. Services are not provided by the Deloitte Touche
Tohmatsu Verein, and, for regulatory and other reasons, certain member firms do not provide services in all four
professional areas.

As a Swiss Verein (association), neither Deloitte Touche Tohmatsu nor any of its member firms has any liability for each
other’s acts or omissions. Each of the member firms is a separate and independent legal entity operating under the names
“Deloitte”, “Deloitte & Touche”, “Deloitte Touche Tohmatsu”, or other related names.