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UK Private Motor Insurance: Market Dynamics & Opportunities 2017

UK Private Motor Insurance: Market Dynamics & Opportunities 2017

  • August 2017
  • 63 pages
  • ID: 5082291
In this report:
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UK Private Motor Insurance: Market Dynamics & Opportunities 2017

Brief

Private motor insurance market grew significantly in gross written premiums in 2016. This was due to growing premiums, which reached a record high because of an insurance premium tax rise, rising car repair costs, and the change of the personal injury discount rate from 2.50 percent to ~-0.7 percent. The latter move resulted in bigger claims costs for insurers, which impacted their profitability; they responded by raising premiums.

The final decade has been challenging for the private motor insurance market. Regulators and insurers have fought to reduce claims costs and pass on savings to customers, but with little luck as the sector has adjusted to the post-LASPO era. Premiums have been growing and have hit record highs due to rises in IPT and the change of the personal injury discount rate. The industry is now seeing a wave of tighter legislation to reduce claims costs. Reforms aim to disrupt the role claims management companies and solicitors play in encouraging claims and confront the UK's whiplash epidemic. However, with current political and economic uncertainty the next few years will be a pivotal time.

In 2015, exhaustive policies accounted for 93.20 percent of the market, whereas non-comprehensive and motorcycle held 5.50 percent and 1.30 percent shares respectively as per our UK General Insurance Competitor Analytics. Providers have been exiting the non-comprehensive motor insurance market for some time. Since the majority of claims costs combined with motor insurance come from third-party involvement in a claim, it is no longer viable for insurers to offer basic third-party cover as opposed to fully exhaustive cover. This has resulted in non-comprehensive policies losing market share in the private motor insurance space.

Critical success factors include -

- Utilize big data to benefit consumers save on premiums - With premiums increasing, insurers should look towards non-standard motor insurance policies including telematics, car sharing, and usage-based policies to benefit clients reduce their premiums.

- Insurers must learn from LASPO - As claims costs begin to fall from the impact of additional reforms, insurers must collectively ensure that market overcapacity does not lead premiums to fall unsustainably low and compromise market profitability in anticipation of savings.

- Prepare for driverless cars - Insurers must consider how insurance will change with driverless technology. Insurers must begin to design dual policies that cover both the driver and the vehicle being in control. Collaboration with car manufacturers is also main if insurers are to remain challenging as driverless vehicles begin to enter the motor parc.

The market research "UK Private Motor Insurance: Market forces & Opportunities 2017" examines the UK private motor insurance market, looking at market size as well as changes in premiums, claims, road casualties, the motor parc, regulations, and alternatives. It discusses competitors in the sector, how the industry is likely to change due to telematics and driverless cars, and provides future forecasts of market size up to 2021.

Firms mentioned in this industry report: Admiral, Aviva, Direct Line, LV=, Allianz, Ageas.

Overview

- GWP for the private motor insurance market grew by 12.40 percent to £12.2bn in 2016.

- Bodily injury claims are the more important cost for motor insurers, with the average claim costing £10,799.

- Direct Line and Aviva are the leading private motor insurers, with market shares of 12.40 percent and 12.10 percent respectively in 2015.

Great reasons to purchase

- Ensure you remain ambitious as additional innovations and insurance models begin to enter the sector.

- Be prepared for how regulation will impact the private motor insurance market over the next few years.

- Benchmark yourself against competitors.

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