15 January 2016 Insurance

Irish insurance market less prone to major nat cat events: S&P

The Irish insurance market is less prone to major natural catastrophe events than other property/casualty (P/C) insurance markets, according to a new report by S&P.

The report, Irish Property/Casualty Insurance Sector Carries An Intermediate Industry And Country Risk, covered both commercial and personal lines.

“Freezing temperatures, storms, and floods have depressed underwriting results in previous years, but have never presented a sustained challenge to capital adequacy,” said the firm.

“Generally, such events have contributed one or two percentage points to the gross market combined ratio over the past 15 years. Reinsurance protection has helped contain this risk for insurers.”

S&P did state in the report however that Irish insurance industry had a difficult year in 2015 overall.

“Although the industry continued to grow for the second year in a row, deterioration in the claims environment arising from changes in the legal, legislative, and judicial framework over the past 18 months will likely make 2015 and 2016 loss-making years,” said the firm.

The industry and country risk for the Irish P/C insurance sector is intermediate, according to the report.

S&P said it assesses country risk as low; reflecting its view of Ireland's solid economic growth prospects, which it expects to underpin further improvements in the government's budgetary position.

It said that Ireland's P/C sector benefits from the country's favourable demographics, openness, and labour and product market flexibility. S&P’s stable outlook on the 'A+' long-term sovereign credit rating on Ireland reflects its view of the balance between upside potential for the ratings if Ireland's government debt declines faster than it currently anticipates, as well as the risks associated with continued strong economic growth and post-election fiscal policy.

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