Minister for Finance statement on Insurance Companies increased profits for multiple consecutive years

The Minister states:

I recognise the concerns on profitability levels in certain segments of the market. Structural reform and ensuring the long-term affordability and sustainability of the Irish insurance market, while ensuring a viable insurance sector, are priorities for this Government.

The insurance market’s profitability in 2022 and 2023 was supported by significant reserve releases following the Covid-19 pandemic. After a number of years of losses, the National Claims Information Database data shows that the insurance market was profitable again in 2023. For liability insurance, the operating profit was 13% in 2023, and the long-term average operating profit was 2.1% between 2009-2023. The motor insurance market had an 8% profit in 2023, with a long-term average profit of approximately 5 % between 2009-2023.

Globally, 2023 was characterised as a hard market with higher premiums, stricter underwriting conditions and higher reinsurance costs. In contrast, industry insights suggest that 2024 showed a softening market with increasing competition and falling rates which have translated into lower premia in some market segments, but further work is needed.

That is why the Government is developing a new action plan for insurance reform that will prioritise further competition in the market. It will include further work, including with insurers, to enhance transparency and promote affordability across all types of insurance. My Department has concluded the public consultation and is reviewing the various submissions.

As a small, open insurance market that is heavily reliant on overseas capital, many insurance providers operating here are branches of international groups, meaning profitability and pricing are influenced by global capital allocation decisions. Reinsurance plays a crucial role in this context - by providing insurance to insurers, it helps them manage large or unexpected losses, supporting stable pricing and underwriting capacity in the domestic market. The Programme for Government commits to proactive engagement with the international insurance industry, with the aim of attracting more firms to establish a presence in Ireland, increasing competition and improving consumer outcomes.

In conclusion, reform of the sector continues to be a Government priority to deliver accountability, transparency and fairness, ensuring customers are paying a fair price for their insurance premiums.