Fall in long-term premium income hits UK insurers
The UK saw an 18% drop in net worldwide premium income in 2008, to £215.3 billion, according to International Financial Services London (IFSL), a body set up to promote UK financial services.
The decline relates particularly to long-term premiums, which typically account for around 80% of insurance business in the UK.
Last year, long-term premiums fell by nearly a quarter to £168.1 billion, with occupational pensions premiums seeing the biggest decline, followed by life insurance.
Furthermore, in the first nine months of 2009 new long-term premium income was down 35% year-on-year.
General insurance premiums on the other hand increased by 8% during 2008 to £47.2 billion, mainly a result of strong overseas sales.
IFSL is predicting that premium income will remain “subdued” in 2009, with a recovery likely to begin in 2010.
The independent body also notes that the industry is exposed to the economic downturn in terms of both assets and liabilities.
However, the extent of losses on both sides has been limited so far and IFSL concludes that most UK insurance companies have enough capital to absorb losses.
According to IFSL data, the insurance sector accounts for 1.6% of UK GDP and provides employment for 325,000 people including 50,000 in the London Market.
Category: Financials, Insurance News
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