Table Of Contents
OVERVIEW
Catalyst
Summary
EXECUTIVE SUMMARY
The UK non-life insurance market grew strongly throughout 2010
Most lines experienced strong GWP increases
Accident and health insurance have led GWP increases
Profitability declined in the commercial insurance market in 2010
The commercial lines COR increased to 113.0%, net of reserve releases
Commercial GWP grew strongly in 2010
Reserve releases were large across the industry
Aviva is the largest commercial lines insurer
Aviva grew its GWP by 12.1% in 2010 to £1,658m
RSA increased its GWP by 5.1% during 2010
The commercial market will see strong growth over the next five years
Each commercial market will see varying levels of growth
MARKET CONTEXT
Introduction
The UK non-life insurance market grew strongly throughout 2010
Most lines experienced strong GWP increases
GWP increases have been strong across most lines
The total general insurance market COR remained steady
The underwriting cycle is becoming less volatile
Insurers rebuilt reserves during 2010
Insurers put aside £890m to rebuild reserves over the year
Trading results fell in 2010
Investment income is increasing as the economy recovers
UK personal insurance makes up the majority of UK general insurance GWP
Profitability declined in the commercial insurance market in 2010
The commercial lines COR increased to 113.0%, net of reserve releases
The commercial insurance market is worth £14.8bn
Commercial GWP grew during 2010
After three years of weak growth and losses commercial GWP are increasing
The average COR for commercial insurance increased slightly
Commercial property and motor are the least profitable business lines
The majority of the UK general insurance market is made up of ABI members
Reserve releases were large across the industry
Underwriting results have been volatile post-2008
The commercial liability line returned an underwriting profit in 2010
Commercial motor market saw robust growth in 2010
The commercial motor COR increased in 2010, despite premium rises
Commercial property returned to strong growth in 2010
Competitive pressures and a struggling construction sector are restricting commercial property growth
Commercial liability COR increased to 111.5%
The commercial liability market GWP shrunk by £29m
Commercial pecuniary claims fell strongly in 2010
Commercial pecuniary insurance is increasingly being written for overseas trade
Falling claims costs have helped commercial pecuniary COR to fall
DISTRIBUTION DYNAMICS
Introduction
Distribution channels are expected to have stayed fairly constant for 2010
Brokers dominate distribution in the UK commercial market with an 82% market share by GWP
The proportion of policies written directly to insurers is expected to have increased by 1%
Banks and building societies have only generated a small proportion of commercial insurance GWP
SMEs are most likely to trust an insurer based on a referral or prior experience
Medium-sized enterprises are the least likely to stay with their provider for more than 10 years
Market participants are improving their online offering
COMPETITIVE DYNAMICS
Introduction
The top 10 insurers grew throughout 2010
Aviva grew its GWP by 12.1% in 2010 to £1,658m
RSA increased its GWP by 5.1% during 2010
Zurich lost £163m worth of GWP, a reduction of 12%
Allianz experienced a profitable COR of 95.4%
Chartis grew its GWP by £25m, an increase of 3.3% throughout 2010
AXA's GWP declined by a substantial 14.6% to £743m
ACE increased its GWP by more than 80%
QBE increased its GWP by 5.9% during 2010
RBS's GWP grew by £2m during 2010
NFU has experienced a bad year during 2010
Most market players experienced losses during 2010
Larger companies grew most during 2010
FUTURE DECODED
Introduction
The commercial market will see strong growth over the next five years
Each commercial market will see varying levels of growth
Commercial motor GWP will increase to £5bn in 2015
Rate increases are expected to raise GWP in 2011
Commercial property GWP will reach £6bn by 2015
The market will return to growth in 2015
The soft market is ripe to turn
Liability GWP will grow over the next couple of years
A profitable line, liability insurance will see steady growth during the next three to five years
Prices are falling in the commercial pecuniary market as competition intensifies
The pecuniary market is seeing strong growth in demand and will reach £732m by 2015
APPENDIX
Additional data
Definitions
ABI members
Accident year combined operating ratio
Brokers
Earned premiums
Gross premiums
Net premium
Reported year combined operating ratio
Prior years’ reserve development
Written premiums
Methodology
Further reading
Ask the analyst
Disclaimer
LIST OF TABLES
Table: UK annual GWP growth and COR for the general insurance market, 2000–10
Table: Total market COR (%), 2006–10
Table: Underwriting result, investment income, and trading result as a percentage of NWP (worldwide business of UK insurers), 2000–10
Table: UK general insurance GWP by line (£m), 2006–10
Table: Total market accident year CORs by line of business (%), 2006–10
Table: Commercial market GWP (£m), 2006–10
Table: GWP growth by commercial line (£m), 2006–10
Table: Accident year COR (%), 1996–2010
Table: Accident year COR commercial lines (%), 2006–10
Table: Net written premiums by organization (£m), 2009–10
Table: Reserve development in the commercial general insurance market (£000s), 2006–10
Table: Underwriting result by line of business (£m), 2000–10
Table: Commercial motor GWP and COR, 2006–10
Table: Commercial property GWP and COR, 2006–10
Table: Commercial liability GWP and COR, 2006–10
Table: Commercial pecuniary GWP and COR, 2006–10
Table: Trade credit claims costs and volumes, 2007–10
Table: Breakdown of UK commercial insurance distribution by channel, 2000–10e
Table: Reported year combined operating ratios for the top 10 commercial insurance groups (%), 2010
Table: UK top 10 commercial general insurance groups by GWP and market share, 2009–10
Table: UK total commercial general insurance GWP growth and growth rate, 2007–15f
Table: Key variables affecting commercial motor insurance GWP, 2011f–15f
Table: UK commercial motor insurance GWP and growth rate, 2007–15f
Table: Key variables affecting commercial property GWP, 2011f–15f
Table: UK commercial property insurance GWP and growth rate, 2007–15f
Table: UK commercial liability insurance GWP and growth rate, 2007–15f
Table: UK commercial pecuniary insurance GWP and growth rate, 2007–15f
Table: Total market GWP by line of business (£m), 1995–2010
Table: UK total pecuniary loss underwriting accounts (£m), 2001–10
Table: UK property underwriting accounts (£m), 2001–10
Table: UK total household underwriting accounts (£m), 2001–10
Table: UK total commercial property underwriting accounts (£m), 2001–10
Table: UK total motor underwriting accounts (£m), 2001–10
Table: UK personal motor underwriting accounts (£m), 2001–10
Table: UK commercial motor underwriting accounts (£m), 2001–10
Table: UK total liability underwriting accounts (£m), 2001–10
Table: UK total accident and health underwriting accounts (£m), 2001–10
LIST OF FIGURES
Figure: Commercial motor is leading commercial insurance growth
Figure: Commercial insurance growth will be irregular within the forecast period
Figure: GWP in 2010 grew strongly but COR remained high
Figure: UK GWP grew across the board during 2010
Figure: Profit margins declined slightly for the total general insurance market in 2010
Figure: A rebuilding of reserves points towards a hardening market
Figure: Investment income continued to improve in 2010
Figure: Personal insurance remains the largest non-life sector
Figure: Only commercial insurance suffered a decline in profitability in 2010
Figure: Liability remains the largest commercial insurance sector
Figure: Most commercial lines showed GWP increases during 2010
Figure: The commercial insurance COR worsened notably in 2010
Figure: All commercial lines' CORs increased in 2010
Figure: ABI members dominate the UK insurance market
Figure: The commercial property market made substantial releases in 2010
Figure: Underwriters made an underwriting loss in the total commercial market in 2010
Figure: Commercial motor COR deteriorated during 2010
Figure: Commercial property GWP grew strongly on the back of a rising economy
Figure: Commercial liability's COR rose as a result of increasing litigation
Figure: Public liability and professional indemnity are responsible for the majority of liability GWP
Figure: After a significant jump, pecuniary COR became profitable in 2010
Figure: Following the recession trade credit insurance has become increasingly export-focused
Figure: Trade credit claims and costs have fallen sharply
Figure: National brokers are estimated to have experienced a slight decrease in market share in the UK commercial insurance market in 2010
Figure: Allianz, Brit Insurance, Aviva, and ACE achieved a profitable COR during 2010
Figure: ACE grew strongly throughout 2010
Figure: Commercial insurance growth will be erratic within the forecast period
Figure: Commercial motor GWP will show strong growth during 2011–12
Figure: Commercial property GWP will top £6bn in 2015
Figure: Liability GWP will grow strongly on the back of increasing litigation
Figure: Commercial pecuniary insurance GWP will grow steadily in line with GDP