Aon expects rates rise on motor insurance

by David Masters

Story link: Aon expects rates rise on motor insurance

British firms renewing their motor insurance policies this quarter should expect to see an increase in premiums, Aon warned this week.

In a survey by the insurance firm 91% of brokers predicted a rise in rates for the third quarter.

This is in contrast to the second quarter when every underwriter polled said rates would hold.

However, as the recession tightens its grip, companies have reduced their motor fleets and thus their insurance spend, pushing up premiums.

The poll also discovered 40% of brokers expecting a third quarter rates rise for casualty/liability insurance, and 35% expecting a rise for property insurance.

“Insurers continue to tell us that they need to see an increase in rates soon in order to return to a sustainable level of profits,” said Steve Redgwell, Aon’s head of broking for medium and large companies.

“However, whilst their reserves are running low the overcapacity in some areas, fuelled by new market entrants and the competition amongst insurers for income, is keeping rates down.

“Aon maintains that, overall, we will see little change for property and casualty insurance, though it is expected that rates will rise for these categories in Q4.

“There is a strong consensus amongst insurers that motor rates will continue to increase slowly through Q3 and Q4 as current losses are simply unsustainable.”