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Irish credit unions to start giving home cover

Consumers are to benefit from greater competition in the insurance market as credit unions launch home cover.

With almost three million credit union members the move is expected to shake up a market where there is already a high level of competition.

The move into home insurance by credit unions in the Irish League of Credit Unions comes months after they started offering motor insurance.

Some 377 credit unions are members of the league, with the organisations anxious to offer more services to generate more income.

A spokeswoman for the league said there would be no administration fee for taking out the home cover.

Households which take out the new product will get two months free cover, which amounts to 12 months cover for the price of 10.

There will be a 30pc no-claims discount if households do not make a claim for three years. Alternatively, credit union members can get a 20pc discount if their car is insured with AIG.

There will be a choice of three levels of cover.

The spokeswoman said: “In 2015, credit unions are hoping to launch a new home insurance product, which will be offered alongside car and travel insurance under the CoverU.ie brand, through AIG.”

The move into home insurance will pile pressure on the main insurers. Last year, premiums were down 1.7pc on average, according to the Central Statistics Office.

AIG already underwrites the car and travel insurance offerings from credit unions.

Credit unions have been criticised for being overly dependent on loans to earn income.

But loan defaults and low demand have meant that many of them have been unable to return a surplus from their lending.

However, most credit unions have been getting their levels of arrears down.

Some of the surplus, or profit, made by the credit unions is distributed to members in dividends on savings and rebates on the interest charged for loans.

Now it has emerged that more credit unions were able to pay a dividend in 2014, with higher dividends expected in 2015.

“From the early figures, it looks like more credit unions will pay out a dividend for 2014, which is positive for members,” a spokeswoman for the league said.

The average dividend for 2013 was 0.89pc, with 311 out of 377 credit unions paying a dividend.

And in a survey carried out by the league for the Irish Independent, it has emerged that credit unions have some of the lowest lending rates in the market. The average car loan from a credit union is 7.51pc.

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