The cost of car and bike insurance may have to rise considerably after the increased incidence of theft and the ever rising price of repairs, according to one of the Island's top insurance companies, BF&M.

And if premiums do not go up, some particularly theft-prone bikes like the Honda Scoopy, could become uninsurable as the insurance company struggles to make ends meet.

"We can't keep having things like this," said Glenn Titterton, president and chief executive officer of BF&M, speaking to The Royal Gazette after the release of the company's annual report. "We are paying for the losses out of other businesses. Most motor insurers would heave a sigh of relief if they weren't losing money. Just not to be losing money would be a huge step forward."

And he said that premiums would have to go up in the region of about 50 percent in order to make the sector viable in his business.

BF&M said in its annual report for 2002 that since 2000 the cost of claims for private cars has risen by 59 percent - while the cost of insurance has hardly changed.

And the incidence of cycle thefts increased by 31.5 percent in 2002 and were responsible for a huge chunk of the cycle claims made to BF&M.

The company said that its motor division had not been profitable for a number of years - and that the price of insurance has not kept pace with the soaring costs - and it said that this could not continue.

"Out of the last ten years I would say that only one year has shown a profit in the motor insurance side," said Mr. Titterton.

But he said that motor insurance was an important sector of an insurance company's business, as motor insurance was the first kind of insurance obtained by young people.

"But it is a class of business that has grown like topsy," he said.

"The number of vehicles on the Island has grown so much. We lose substantial amounts every year."

He said that the insurance companies competed for cost but that it was becoming untenable. While rates had been creeping up five percent here and there, the increase in the cost of claims had been much more dramatic.

And he said the cost of repairs had increased due to the types of cars and the variety of cars on the Island's roads and the increased price of labour and parts which has to be flown in.

Mr. Titterton added that the cost of liability claims had also increased in line with the rising cost of hospital costs - but that a single $2 million claim could wipe out the reserves for the Island.

He said that the premiums paid in Bermuda were lower than in other jurisdictions, and in some places a young person could only get insurance for thousands of dollars - but here the cost was just hundreds.

"We have an incidence of accidents which are costing more to repair and the injury costs are getting higher and motor insurance premiums are not keeping up," he added.

The annual report said: "The motor business requires special comment. We have significant market share and we regard the provision of private car and motor cycle insurance as important.

"Motor insurance has not been profitable for a number of years. The increased incidence of theft, coupled with the rapidly rising cost of repairs, has been a serious problem for some time. 2002 merely continued this upward trend. The average cost of claims for a private car account rose by 20 percent in 2002 and has risen by 59 percent since 2000.

"Premium increases over the same period have been modest by comparison and are not keeping pace with rapidly increasing claims costs. This cannot continue."

BF&M said that the high incidence of cycle claims was a reflection of social problems on the Island and that little was being done to stop the problem."Motor cycle is a particular area of concern where cycle theft claims were up by 26 percent on top of a 15 percent increase the previous year," said the report."The cost of cycle thefts increased by 31.5 percent in 2002. Cycle thefts account for 48 percent of all cycle claims and 78 percent of all own damage claims. The incidence of cycle thefts is a symptom of a broad social problem in Bermuda and there is no evidence of the strong leadership or the co-ordinated community approach that will be required if a solution is to be found."

BF&M also said that it had a satisfactory year for house claims as there was no significant storm activity.

It added that the results in its marine department were disappointing where the severity of claims increased although the frequency returned to previous levels.

And it added that an underwriting review of the marine sector was under review to make sure that it returned to profitability.

BF&M also reported that 2002 was a difficult year for its business clients that faced increased insurance costs.

"A significant amount of time was spent on ensuring that our existing clients were offered options to help manage the increased insurance costs which they faced as a result of the '9/11' and other catastrophes."

Property claims were also down with the frequency and severity of claims reduced by 32 percent compared to a year earlier.

There were no significant fire losses and BF&M said it was a favourable year for windstorm claims, but it noted that there was a significant increase in commercial theft with five claims accounting for 37 percent of all losses.