TABLE OF CONTENTS
Overview 1
Catalyst 1
Summary 1
Executive Summary 2
2009 was a much better year for the commercial lines market 2
The commercial insurance market continued to release reserves to bolster results 3
Some insurers are pursuing a strategy of reducing exposure to less profitable business 3
Commercial lines growth will continue over the upcoming years 4
Market Context 11
Introduction 11
Overall market deterioration was less pronounced during 2009 11
The total general insurance market COR remained steady 16
Trading results fell slightly in 2009 22
Lower reserves were released during 2009 24
The commercial lines market returned to growth in 2009 26
Profitability improved in the commercial insurance market in 2009 29
Distribution 35
National brokers account for half of all commercial insurance sold 35
During 2009, the direct channel increased its market share 36
The remainder of the market is made up of bancassurers, agents, and brandassurers 37
Competitive Dynamics 40
Introduction 40
A number of insurers are withdrawing from unprofitable commercial business 40
Nevertheless, half of the top 10 commercial insurers have grown their presence 42
Future Decoded 46
Introduction 46
Growth in the commercial market will continue over the coming years 46
Liability GWP is expected to increase over the coming years 48
The commercial motor market should see a hardening in prices 51
Growth will be slow for commercial property GWP 53
Prices are falling in the commercial pecuniary market as competition intensifies 55
Appendix 57
Definitions 57
Additional data 59
Further reading 65
Ask the analyst 65
Datamonitor consulting 65
Disclaimer 65
LIST OF FIGURES
Figure 1: The total market returned a better COR despite a slight fall in total premiums in 2009 12
Figure 2: In 2009, only the liability line of general insurance grew in terms of premiums 13
Figure 3: ABI members make up 84% of the market 15
Figure 4: Profit margins improved slightly for the total general insurance market in 2009 16
Figure 5: The commercial insurance COR noticeably improved in 2009 18
Figure 6: The property, pecuniary loss, and liability insurance markets all returned lower CORs in 2009 19
Figure 7: Underwriting losses took a turn for the worse in the motor insurance market in 2009 20
Figure 8: Investment income improved during 2009 22
Figure 9: In 2009, reserve releases were below the levels recorded in 2008 24
Figure 10: Insurers operating in the pecuniary loss market bolstered their reserves in 2009 25
Figure 11: Total commercial insurance GWP showed a marginal increase in 2009 27
Figure 12: Almost three quarters of the commercial market is made up of commercial property and liability 28
Figure 13: 2009 was characterized by an improvement in the commercial market COR 29
Figure 14: 2009 was a better underwriting year for the commercial insurance market 30
Figure 15: The commercial property market made substantial releases in 2009 32
Figure 16: ABI members made an underwriting loss in the total commercial market in 2009 34
Figure 17: The distribution landscape for commercial lines saw no significant changes in 2009 38
Figure 18: Allianz, NFU Mutual, QBE, Ace, and Brit all gained market share in 2009 44
Figure 19: Commercial lines GWP growth will come as insurers push up rates and demand increases 47
Figure 20: The UK liability market will see year-on-year growth over the next five years 49
Figure 21: 2010 should see significant upwards rate adjustments in the commercial motor market 52
Figure 22: Incipient growth should precede stronger GWP increases for the commercial property market 54
Figure 23: The commercial pecuniary market will grow to reach pre-recession levels by 2014 56
LIST OF TABLES
Table 1: UK, annual GWP growth and COR for the general insurance market, 2000–09 12
Table 2: Total market GWP by line of business (£m), 1990–2009 14
Table 3: UK, insurance market split by proportion of ABI members and Lloyd's of London 15
Table 4: Total market COR (%), 2005–09 17
Table 5: Total market accident year CORs by line of business (%), 2005–09 19
Table 6: Underwriting result by line of business (£m), 1998–2009 21
Table 7: Underwriting result, investment income and trading result as a percentage of NWP (worldwide business of UK insurers), 2000–09 23
Table 8: UK, commercial insurance GWP by line of business (£m), 2006–09 28
Table 9: Accident year COR, commercial lines (%), 2005–09 31
Table 10: UK, reserve developments in the commercial general insurance market (£000s), 2006–09 32
Table 11: ABI member reported year underwriting results, commercial lines (£m), 1999–2009 34
Table 12: Market share of commercial general insurance distribution channels (%), 1999–2009 39
Table 13: UK, top 10 commercial general insurance groups by GWP and market share, 2006–09 45
Table 14: UK, total commercial general insurance GWP (£m), 2006–14f 47
Table 15: Key variables affecting liability insurance GWP, 2010f–14f 48
Table 16: UK, liability insurance GWP, 2006–14f 50
Table 17: Key variables affecting commercial motor insurance GWP, 2010f–14f 51
Table 18: UK, commercial motor insurance GWP, 2006–14f 52
Table 19: Key variables affecting commercial property insurance GWP, 2010f–14f 53
Table 20: UK, commercial property insurance GWP, 2006–14f 54
Table 21: UK, commercial pecuniary insurance GWP, 2006–14f 56
Table 22: UK, total pecuniary loss underwriting accounts, 1998–2009 (£m) 59
Table 23: UK, total property underwriting accounts, 1998–2009 (£m) 60
Table 24: UK, total household underwriting accounts, 1998–2009 (£m) 61
Table 25: UK, total commercial property underwriting accounts, 1998–2009 (£m) 61
Table 26: UK, total motor underwriting accounts, 1998–2009 (£m) 62
Table 27: UK, total personal motor underwriting accounts, 1998–2009 (£m) 62
Table 28: UK, total commercial motor underwriting accounts, 1998–2009 (£m) 63
Table 29: UK, total liability underwriting accounts, 1998–2009 (£m) 63
Table 30: UK, total accident and health underwriting accounts, 1998–2009 (£m) 64