Oireachtas Joint and Select Committees

Thursday, 4 July 2019

Joint Oireachtas Committee on Finance, Public Expenditure and Reform, and Taoiseach

Insurance Sector: Discussion

Photo of Kieran O'DonnellKieran O'Donnell (Fine Gael) | Oireachtas source

I am looking at €370 million of premiums written with a net profit of €50 million. I am looking at 50 divided by 370, which is approximately 13.4%. This is the question I am posing. The company representatives say they are looking to make margins of 6% for Allianz, 5% for AXA and 8% approximately for FBD. They have made well above those margins in 2018. Why was some element of the profit above the margin sought not passed back to reduced premiums? The companies cannot simply blame it on legal fees or the fraudulent aspect. The company representatives need to explain it to me and to the ordinary person. The companies are profitable.

Insurance companies have to make a profit but they cannot be fleecing the customer. This is the question for us. We have a body of work to do. It is not personal. This is an issue. We have had the legal profession in. Their fees are excessive. I also believe there is an issue within the insurance industry. We are coming here looking at figures on the day. I have not had hours to prepare but we can see the figures in stark terms. The companies are profitable. In fact, I would say they were super-profitable in 2018. The companies earn well above the margins they are required to make. Why was that increased profit in some element not passed back to the consumer? The company representatives might deal with that question. I have limited time.

I am being specific for a reason because I think it is all about facts. The facts are that the insurance industry is before us today. We have to probe the figures. The figures show that the companies are profitable above the margins they are required to make. Allianz got approximately 7.4%. It was looking for 6% and made €37 million. AXA made €89 million and looked for 5% marginal but secured 11.5%. FBD looked for 8% and got 13.4%, which is well above the target and corresponds to €50 million. Will the company representatives deal with that specific point? It is not about blaming other elements of insurance fraud but specifically the area the companies have direct responsibility for and control over.

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