Insurer hit by claims farming, credit hire and fraud, pushing pre-tax profits down by 50%
Groupama’s profits were slashed in half largely due to losses in the motor market, as chief executive François-Xavier Boisseau warned that prices rises are needed to ‘stem the bleeding’.
The insurer posted a fall of over 50% in pre-tax profits for 2009 to £14.1m, compared with £30.1m in 2008. It was hit by claims farming, credit hire and fraud, as well as weather-related claims.
Boisseau said: “It is encouraging that premiums are beginning to rise in personal lines. But in motor the market will need to see continuing increases throughout 2010 to stem the bleeding. Frankly, with a market combined ratio estimated at 120%, this particular patient remains on the critical list and will still need major surgery to return to better health. The combined challenges of claims farming, credit hire and fraud are very serious and the market needs to work together to find solutions. In the meantime, premium rates must continue to rise.”
Total revenues increased 3.9% to £450.3m. Combined revenues in the group’s broking businesses inched up from £66.4m to £66.5m. Boisseau added: “With the exception of private car, our underwriting performance has been solid and there have been excellent performances from our household, healthcare, motorcycle and small fleet portfolios. This bodes well for the future.”