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Daily Insurance Industry News
Tuesday 14th of August 2018
June 18, 2011

Motor insurance underwriting losses exceed £2bn

by Gill Montia

Story link: Motor insurance underwriting losses exceed £2bn

Results delivered by UK motor insurers in 2010 will act as another spur to keep upward pressure on premiums, Deloitte has suggested.

Research from the business advisory firm indicates that in 2010, motor insurers lost 20p for every pound of premium earned, posting a net combined ratio of 120% compared with 119% in 2009.

On this basis, underwriting losses exceeded £2 billion last year, although companies skilled at selling add-ons to basic motor cover may have seen some value created for shareholders.

According to Deloitte insurance partner, James Rakow: “One key reason for the poor results is that at a market level the reserves established by insurers were topped up in 2010, the first significant strengthening since the last recession in the early nineties.”

He adds: “This ended a period of unprecedented reserve releases, which had served to prop up the headline market results.”

With the UK motor insurance market unlikely to return to profitability until 2012 at the earliest, some insurers are turning to predictive analytics to forecast potential future behaviours in areas such as customer and claims management, fraud detection and underwriting.

In addition, insurers are looking at an increased use of geospatial analysis, telematics and external data, to enhance their underwriting capabilities.

The firm’s insurance analytics lead partner, Gurpreet Johal, comments: “Given the current results delivered by companies in the motor insurance market there is a strategic imperative to adopt predictive analytics at the core of their businesses.”

He adds: “It will be game changing for those insurers who are able to embed the insight they gain through predictive analytics in their key decision making and business-as-usual activities.”

 

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