Financial research and consultancy firm Celent, recently released the details of their UK personal injury market report, which indicated that despite recent decreases in the number of road traffic accidents and safety improvements to cars and roads since 2001, discount car insurance providers have been seeing their injury-related costs continue to rise.
The report found that with premiums that represented 29 per cent of all non-life premiums in 2009, the motor insurance sector is the largest general insurance business class in the UK. In relative terms, there are only a small number of insurers active in the UK, with only 53 firms and 11 Lloyd’s syndicates currently active compared to the more than 200 firms that have been registered.
2009 saw 24.8 million private motor insurance policies active in the UK. This has increased by 3.4 per cent over the past 10 years, and experts attribute the growth to an increase of the number of private cars on the nation’s motorways. In more recent years, the growth rate has been flat due to the weakness of the car market however.
The report also found that a deterioration in underwriting results cannot be hidden by the hard trading conditions for car insurers in the UK. Insurers have been reporting motor insurance underwriting losses for more than 15 years, with 2009 having the highest underwriting loss ever reported. The sector’s combined operating ratios reached 121 per cent in 2009, which is an all-time high, Celent reported.
Factors that affected the report’s results include aggregators that support insurance price competition. This has resulted in consumers in the UK paying some of the lowest-priced motor premiums in the entire Euro zone, despite rising costs associated with increased injury claims.