Motor insurance premiums grew by 5% – £700m – to £13.9bn in 2015, according to analysis by Deloitte.
The business advisory firm highlighted that while premiums have gone up primarily on personal lines, the industry is still struggling to generate an underwriting profit.
According to its figures the headline net combined ratio (NCR) of 102% (2014: 101%) means that £102 is spent on claims and expenses for each £100 of premiums earned.
James Rakow, insurance partner at Deloitte said: “Large rate increases and changes to insurance premium tax have meant many consumers’ pockets have suffered.
“Figures from the Association of British Insurers have shown the average cost of annual private car comprehensive insurance premium in 2015 stood at £403. Based on our analysis, this could potentially reach £440 in 2016.”
Rakow predicted that drivers were going to continue shopping around for the best deal. He noted that building brand loyalty will be more important than ever and that insurers will need to work harder to tailor products and premiums to individual needs.
He also addressed other broader trends that could affect insurers in the coming years.
“We’re seeing more cars being registered in the UK, but car usage is declining with more journeys by public transport,” said Rakow. “As well the proportion of older drivers is rising.”
He concluded: “Combined with the long-term expectations for autonomous cars to become the norm, motor insurance is going to look very different in the future.
“Insurers will need to change how they think about risk, as our roads fill up with smarter cars over the coming decade.”
article care of insurance age, article by Emmanuel Kenning