WHO’D be a car insurer? With regulators lining up to tell the sector what to do and technology busily disrupting established business models, firms like Direct Line, Admiral and Esure are enjoying a rough ride. The latest news on plunging UK car insurance premiums promptly sent share prices for all three screeching downhill.
Rightly so. At the end of 2012, the EU gender directive clamped down on insurers charging men more for being statistically more accident-prone behind the wheel. Having driven policies down for men, many thought the firms would have to make up the shortfall by charging women more.
It hasn’t worked out that way: the latest figures from Confused and Towers Watson show prices down for both sexes. Premiums for young women are down 31 per cent year-on-year, beating the 28 per cent drop for young men.
That’s partly due to the influence of new technology. Price comparison websites are now so mainstream that this week one Surrey motorist claimed a meerkat toy was proof he’d purchased car insurance.
While this trend sharpens competitive pressures in itself, it also speeds up the adoption of other premium-cutting technologies, notably telematics. A little black box monitoring your performance at the wheel is yet another way to bring down insurance costs, at least for careful drivers.
And the regulators are not done yet: the Competition Commission was critical in December last year on the cost of add-on products for motor insurance.
All of this is great for cost-conscious motorists, but not so much for the insurers. As regulators play backseat driver and technological change accelerates towards a world of driverless cars, it doesn’t look a safe business to be in.