The heads of three major insurance companies operating in Ireland were before the Oireachtas joint committee on finance and public expenditure last week. They each denied that they were charging too much for insurance, blaming fraudsters who exaggerate claims, the level of payouts awarded, as well as high legal costs.

Fiona Muldoon, the CEO of FBD, the country’s only Irish insurer, said FBD is charging more than it was five years ago and its customers are now paying more. Muldoon defended the level of profits in the business, saying that the industry is highly competitive.

Muldoon said she wanted to tackle the false idea that FBD is making outsized profits at the expense of its customers

FBD is being investigated along with other insurers operating in Ireland to assess whether Insurance Ireland, the industry association, is operating a cartel. The European Commission is looking into whether the conditions of access of Insurance Ireland’s data pooling system are in breach of EU rules and if these conditions restrict competition.

Muldoon said she wanted to tackle the false idea that FBD is making outsized profits at the expense of its customers. Over the last two years, FBD made profits of €50m each year. She said as a business, insurance is risky and is hard to get right.

She said: “FBD is charging an economic price and we are making a fair profit.”

Profit level

Fine Gael Senator Kieran O’Donnell questioned the level of profits made by the industry in 2018. He also challenged the insurers on the margins, stating that they are making way beyond their target margins.

The insurers said the current levels of profit are what is needed for the industry to be sustainable

He said FBD looks for an 8% margin but made 13.4% margin on the premiums taken in for 2018. Alliance, he added, looked for 6% margin but made 7.4% with profits of €37m in 2018. Axa made €89m in 2018, which is 11.5% when they look for 5%, according to what was reported to the committee.

The insurers said the current levels of profit are what is needed for the industry to be sustainable and that you need to look over a period of time rather than one year. He asked why that increased profit in some element was not being passed back to the consumer.