Governments have been warned that climate change will lead to significant increases in the cost of residential and commercial property insurance as current models for assessing flood risk no longer work.
Big insurers have held a series of meetings with Jennifer Carroll McNeill, the Secretary of State for Insurance, amid concerns over rising premiums and high payouts.
of has obtained briefing notes and minutes of meetings between Carol McNeill and the insurance company under the Freedom of Information Act.
At the conference, insurers reiterated their concerns about the impact of climate change.
“Extreme weather events around the world are impacting the ability of Irish insurers to underwrite property insurance,” an AXA Ireland representative said at the conference.
Allianz Insurance said the industry would need financial support from the government for climate-related events because the current model for assessing flood risk is unsustainable.
AIG said it was a difficult market for insurers given the “increased frequency of moderately catastrophic weather events” and losses “in the range of €25 million to €70 million” per event. I warned you.
“As a result, AIG expects the commercial and general real estate markets to experience significant development in terms of capacity limits and price increases in the next renewal period,” the minutes of the meeting said. read.
Peter Boland of the Alliance for Insurance Reform said governments need to plan ahead for sectors that may not be covered by insurance in the next few years.
“This could be true in Ireland as well as in the UK, but not just for flood insurance, as insurers see multiple sectors as non-commercial as the trend towards microsectoring becomes more prevalent. ,” he said. He said.
Meanwhile, RSA Insurance predicted that rising reinsurance prices (insurance prices paid to cover insurers themselves) would also have to be passed on to customers.
The minutes noted, “We have identified the volatile geopolitical environment as a complicating factor, with a potential contraction in reinsurance capacity globally in 2023, which will impact cost and availability of cover. I pointed out that it could affect the possibilities.”
Both companies warned that premiums were rising due to an increase in traffic accidents, and said the impact of inflation and high claims payments were also “hindering” efforts to reform premiums.
Auto insurance prices rose 4% in February 2023 alone “due to inflation and repair costs” after a crash, according to AIG.
“AIG also noted that the frequency of motor incidents has risen by about 30% from pre-pandemic levels, increasing the severity of damage claims,” the minutes revealed.
The firm also expressed concern that “lawyer involvement” prolongs the claims assessment process, arguing that some law firms do not use personal injury assessment boards “under any circumstances.”
RSA told the minister that court delays and inflation after the pandemic were “preventing the full implementation” of the government’s reform agenda and “had concerns about the level of judicial ruling it was looking at.”
Auto insurance premiums fell 6% last year, while home insurance rose 17.9%, health insurance rose 1.5% and travel insurance rose 7.2%, according to the latest CSO figures.
