Boston, MA -- (SBWire) -- 07/01/2013 --Gross written premiums in the UK's private motor insurance category rose by 6.7% in 2011, slowing from the expansion recorded in 2010. The market is dominated by comprehensive policies, with some insurers having axed third-party, non-comprehensive policies in the past few years. Private motor insurance gross written premiums represent 0.9% of the country's GDP, in line with the European average. Motor insurance density in the UK is higher than in its European counterparts, and has followed a clear upward trend. Factors driving growth in the category include mandatory motor third-party liability insurance, rising disposable incomes and a steady increase in private car registrations. The difficult macroeconomic environment is a challenge. A strong return to growth is not expected until 2014, but as this recovery gains traction, premium growth rates in the private motor insurance category are expected to settle around 3%. Adverse factors such as a steep increase in motoring costs and regulatory changes are expected to mitigate growth momentum. Claims paid by private motor insurers have risen by 15% since 2008, in line with an increase in payouts for whiplash claims. The rise has been sharp enough to prompt intervention from the government and a change in the law on referral fees to try and curb the number of personal injury claims. Direct sales remain the main channel for distribution of private motor insurance, but the role of online aggregators has grown rapidly over the last five years. While price comparison websites enhance pricing transparency for consumers, intensified competition for rankings is likely to keep premium rates low. Long-term struggles to achieve profitability have adversely affected car insurers for over a decade. Although 2011 marked a healthy improvement over 2010, low returns on investments and limited premium growth, coupled with high claims payouts, mean profitability is likely to remain elusive.
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Key Highlights
- Market performance in terms of premium growth has been subdued as the market faces opposing dynamics. Meanwhile, growth in claims has surged.
- Distribution channels have evolved in line with widespread internet usage.
- Investment income and profits have failed to keep up.
- Regulatory changes will have mixed effects on firms operating in the private motor category.
- Consumers continue to seek competitive prices.
- Premium growth is expected to settle at 3% by 2017.
Scope
- This report provides a comprehensive analysis of the private motor insurance market in the UK:
- It provides historical values for the UK's private motor insurance market for the report's 2007-2011 review period and forecast figures for the 2012-2016 forecast period
- It analyses the various distribution channels for private motor insurance products in the UK
Companies Mentioned in this Report: Admiral Group Plc, Ageas (UK) Limited, Aviva plc, AXA UK plc, The Co-operative Insurance Society Limited, Direct Line Insurance Group plc, esure, Liverpool Victoria Friendly Society Limited, Royal & Sun Alliance Insurance Plc, Zurich Insurance plc
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