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Friday, 12th April 2024
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Insurance grows faster than GDP Back  
Insurance premiums grew by 22 p.c. from 1997 to 1998, and as the workforce continues to expand, the opportunity for the industry is to maintain growth
The Insurance industry in Ireland is booming. The Irish Insurance Federation (IIF) published its annual Factfile in mid October this year, which highlights numerous insurance industry trends domestically and globally. In 1998 gross domestic insurance premium income (life and non-life combined) was worth over £4.9 billion (¨ 6.22billion). This shows an increase of 22.3 p.c. compared to the 1997 figure and it is the highest growth rate figure in the five-year period 1994-1998. Over this period 1994-1998 the average increase in the premium income rate per annum was 15 p.c. This outstrips growth in nominal GDP, which is calculated at 13.1 p.c. per annum over the same period.

Other data of significance impacting on the insurance industry include: retail price inflation which has not exceeded 2.5p.c. over the period and averaged 2 p.c. per annum. The population increased at an estimated rate of 0.7 p.c. per annum since 1994. This coupled with the significant reduction in the unemployment rate, 6.4 p.c. per annum, means that there are many more consumers joining the insurance market. The statistics within the report show that IIF member companies provide direct employment to over 10,000 people and support backup services employing many thousands more.

The gross premium figure, £4.9 billion is broken down into premium income from the life sector of £3.3 billion, 5.61 p.c. of GDP compared to the non-life sector, totaling £1.6 billion, or 2.66 p.c. of GDP. Life assurance premiums increased by nearly 30 p.c. in 1998 over the previous year. Non-life insurance premium income increased by 9.2 p.c. which is below the growth rate of the economy, 13.1 p.c., demonstrating the continued competitive pressure on rates. The total premium income figure now stands at the increased rate of 8.27 p.c. of GDP.

On a global scale, the Irish insurance market accounts for 0.36 p.c. of the world insurance premiums while America makes up 36.3 p.c. The insurance industry in Ireland is small by world standards, yet in 1997 gross premiums as a proportion of GDP at 7.8 p.c. in Ireland exceeded the world (7.3p.c.), European (6.8 p.c.) and American (7.2 p.c.) figures.

Premiums per head of population in Ireland also ranked above European and world figures.

On the benefit payment and claims side of the business, life assurance claims have almost doubled in the period 1994-1998, passing the £2 billion mark in 1998. Non-life gross earned premiums (GEP) increased by 8 p.c. in 1998 and passed £1.5 billion for the first time. Gross incurred cost (payments plus increase in reserves for outstanding claims) of non-life claims continues to grow at a n alarming rate. Claims costs increased by 10.6 p.c. in 1998, slightly up from 10.3 p.c. the annual increase from 1994-1997.

Value of investment
The market value of life policy holders' funds and non-life technical reserves in 1998 rose by 17.9 p.c. per annum over the five year period. Life policyholders' funds amount to £23.9billion while non-life reserves grew to £3.9 billion. The bulk of life company investments, 72.3 p.c. are in Ireland. Domestic investment was over £17.3 billion at the end of 1998 while foreign investment totaled £6.6 billion.

43 p.c. of life assurance premiums are invested in equities, and 34 p.c. in gilts of of government, local and public authorities.

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