Boston, MA -- (ReleaseWire) -- 04/17/2014 -- The UK commercial motor insurance category has recorded growth since 2008, despite the synchronous recessionary backdrop. Gross written premiums rose at an annual rate of 7.2% in 2012, to a total of GBP3.4 billion and a five-year high. During the review period (2008-2012), premiums posted a compound annual growth rate (CAGR) of 5.50%.
The recession resulted in faltering business confidence, lenders reducing the availability of credit, and a slump in capital spending - including investment in commercial vehicles. Faced with a reduction in the underlying demand for commercial motor insurance, rate rises in the category were largely due to insurers hiking rates to protect profits.
The total combined operating ratio for insurers operating in the category remained above 100% during the review period and stood at a five-year low of 106% in 2012, indicating long-standing profitability struggles. Premium increases enacted during the review period have not been able to offset rising claims payouts, an increase in operating expenses, and record-low interest rates limiting returns on investments. The category is not expected to return to profit until 2015.
View Full Report Details and Table of Contents
Motor insurance claims rose sharply during the review period, reflecting a higher incidence of fraudulent claims related to staged accidents and the resulting payouts for personal injury and whiplash claims. The number of motor-related personal injury compensation cases registered with the government's Compensation Recovery Unit surged in the five years to 2012, in contrast to a 15% fall in road traffic accidents during the period.
The motor insurance industry has collectively prioritized a significant reduction in fraud, introducing measures which include the development of software and databases to improve core risk underwriting, as well as systems to detect false or inflated claims. In addition, the growing use of telematics in commercial vehicle policies and the implementation of the Legal Aid, Sentencing and Punishing of Offenders Act (LASPO) in April 2013 will also have a mitigating effect on commercial motor claims.
The strengthening UK economy has already begun to spur an increase in commercial vehicle registrations, and the Department of Transport forecasts that goods vehicles will be the fastest-growing category of road traffic to 2020. The revival in demand will support a CAGR of 6.23% for gross written premiums over the forecast period (2014-2018), up to a peak value of GBP4.52 billion in 2018. Insurers' overconfidence in the cost-saving effects of the LASPO bill will limit growth in 2014, before rates are adjusted upwards from 2015.
- Performance defied difficult economic conditions
- The recession constrained investment in commercial vehicles
- Insurers in the category have struggled to make a profit
- Claims costs have risen sharply
Companies Mentioned in this Report: Ageas (UK) Ltd, Allianz Insurance Plc, Aviva Plc, Axa UK Plc, Direct Line Insurance Group Plc, Liverpool Victoria Friendly Society Ltd, National Farmers Union Mutual Insurance Society, QBE Insurance (Europe) Ltd, Royal & Sun Alliance Insurance Plc, Zurich Insurance Plc,
About Fast Market Research
Fast Market Research is a leading distributor of market research and business information. Representing the world's top research publishers and analysts, we provide quick and easy access to the best competitive intelligence available. Our unbiased, expert staff is always available to help you find the right research to fit your requirements and your budget. For more information about these or related research reports, please visit our website at http://www.fastmr.com or call us at 1.800.844.8156.
Browse all Insurance research reports at Fast Market Research
You may also be interested in these related reports:
- Non-Life Insurance in Cyprus, Key Trends and Opportunities to 2017
- Non-Life Insurance in Austria, Key Trends and Opportunities to 2017: The Austrian non-life segments written premium value grew from EUR6.5 billion in 2008 to EUR7.1 billion in 2012.
- The Insurance Industry in Armenia, Key Trends and Opportunities to 2018
- Non-Life Insurance in China, Key Trends and Opportunities to 2017
- Life Insurance in Russia, Key Trends and Opportunities to 2017
- Non-Life Insurance in Canada, Key Trends and Opportunities to 2017
- Non-Life Insurance in Argentina, Key Trends and Opportunities to 2017
- Non-Life Insurance in Norway, Key Trends and Opportunities to 2017
- Non-Life Insurance in Hong Kong, Key Trends and Opportunities to 2017
- Non-Life Insurance in the Philippines, Key Trends and Opportunities to 2017