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Daily Insurance Industry News
Tuesday 17th of July 2018
August 28, 2009

Private motor underwriting losses hit £1bn

by Gill Montia

Story link: Private motor underwriting losses hit £1bn

A leading research consultancy is challenging figures provided to the Financial Services Authority (FSA) by the UK’s private motor insurers.

Watson Wyatt claims that the sector made a loss of £1 billion in 2008, more than double the amount reported to the regulator.

The firm suggests that the £493 million loss reported last year was moderated by the use of reserves.

Senior consultant, Ryan Warren, says: “By removing these reserves and allocating these to the year they actually come from, we were able to identify and better understand the true underlying profitability of the market.”

On this basis last year’s £1 billion underwriting loss for UK private motor showed a slight improvement on a £1.1 billion loss for 2007 and according to Watson Wyatt, marks “a break in a continuous trend of losses since 2004″.

Hopefully, 2009 will provide a further improvement as the consultancy expects underwriting losses to shrink from the current 15% of earned premiums to 6%, taking into account a 2% per annum return on capital.

In the meantime, the UK’s private motor insurers face a range of challenges, such as more frequent switching by customers, an increase in periodic payments and an escalation of fraudulent claims.

 

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