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Offering premium refunds should cost Irish insurers nothing

Offering premium refunds should cost Irish insurers nothing

So claim journalists Charlie Weston & Cormac McQuinn writing in the Irish Independent

Giving refunds to motorists on insurance would not cost insurers any money as they are benefiting from lower claims and reduced traffic volumes, analysts have said.

It comes after Irish Finance Minister Paschal Donohoe called on the industry to offer rebates to drivers, similar to what is happening in the US.

The minister told Insurance Ireland the motor segment of the insurance market was very profitable over the past year.

And he said there had been a reduction in claims, with lower traffic volumes evident throughout the country.

Insurance analysts said any costs for insurers of offering rebates on motor policies would be offset by the lower level of claims.

Analyst at Davy Stockbrokers Stephen Lyons wrote in a note for investors that refunds for motorists should be "relatively neutral to underwriting profits as savings on claims losses would be shared".

US motorists are benefiting from average premium refunds of between 15pc and 20pc during April and May, according to insurance analyst at Goodbody Stockbrokers Eamonn Hughes.

If a company like FBD was to offer similar rebates it would cost it between €5m and €7m of premium income but "clearly it is benefiting from a reduction in motor claims frequency, so let's assume they square off".

Insurance Ireland said it noted the minister's call for rebates and would reflect on it. It said rebates of this nature were not occurring to date in the UK or Europe, and it would consult with its members on the topic of refunds as a matter of urgency.

Irish Independent

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May/Jun 2020
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