Car insurers in black for first time since 1994
HEFTY increases in premiums could cause the UK car insurance business to record an underwriting profit for the first time since 1994, according to a new report by Deloitte.
Last year the sector had a combined ratio of 106 per cent – meaning it paid out £106 for every £100 it earned in premiums, equivalent to an underwriting loss of £600m.
But Deloitte’s James Rakow said this was a drastic improvement on a ratio of 120 per cent in 2010 and further increases this year could push the underwriting business into the black.
“We expect improved results to be delivered by motor insurers in 2012 and we could see an underwriting profit for the industry. The last time this was seen was in 1994,” he said.
“With total premiums now reaching £14bn a year, the market is still attractive for insurers who are successful at attracting and retaining profitable customers or selling add-ons to basic cover.”
Despite the underwriting losses, returns on investments have allowed the UK car insurance business to remain profitable.