Personal motor market unprofitable until 2015
by Gill Montia
Story link: Personal motor market unprofitable until 2015
The UK personal motor market will remain unprofitable until at least 2015, as a result of a 30% annual increase in the cost of fraudulent claims and an over-reliance on pricing in an increasingly competitive market.
According to professional services firm, Towers Watson, fraudulent crash-for-cash claims continue to “spiral out of control”, while third-party bodily injury claims have almost doubled in ten years, thanks to an increasing number of claimants per claim and a more aggressive claim management industry.
Furthermore, FSA returns show an industry loss ratio of 100% and a combined ratio in excess of 120% for 2009.
Commenting on the bleak data, Towers Watson senior consultant, George Maher, says: “Our research indicates that just over £80 per policy now goes to pay for fraudulent claims – both hard and soft fraud.”
He adds: “An added societal consequence is the increasing number of people becoming uninsurable, notably younger drivers who are the hardest hit.”
However, not all insurers are in trouble and the professional services firm points out that companies that are proactively managing their claims processes are seeing a decrease in the number of third-party bodily injury claims.
Mr Maher concludes: “The UK personal motor market should be profitable but as long as insurers continue to let fraudulent claims through their defences, any chance of profitability quickly dissolves.”