Wednesday, 25 May 2016

UK motor insurers make underwriting loss in 2015

UK motor insurers made an underwriting loss in 2015 and that loss is likely to deepen this year as higher insurance taxes encourage drivers to shop around for the cheapest deal, a survey from consultancy Deloitte said on Wednesday.

Insurance premium tax rose last year by 3.5 percentage points to 9.5%, and has risen again this year, to 10%. Insurers generally pass the tax onto consumers, analysts say.

‘Large rate increases and changes to insurance premium tax have meant many consumers' pockets have suffered,’ said James Rakoff, insurance partner at Deloitte.

‘Insurers will need to work harder to tailor products and premiums to individual needs.’

The net combined ratio for the sector was 102% in 2015, Deloitte said, meaning £102 was spent on claims and expenses for every £100 of premium received.

Deloitte forecast the net combined ratio could rise to 104% this year, dropping back to 102% in 2017.

Major UK motor insurers include Admiral and Direct Line.

Motor insurers have relied on tapping into reserves, investment returns or add-on services such as legal assistance to boost profits, James said.

The value of insurance premiums rose five per cent last year to a total of £13.7bn ($19.90bn), the survey said.