General Insurance Article - Motor insurers see premiums fall by £400m to £13bn

 This is slightly less than 2013 when the figure hit 102%. However, market premiums have been steadily declining since 2011, and it is possible that ratios in 2015 could sink to 103% and then 105% next year, suggesting insurers will face a challenging couple of years.

  

 James Rakow, insurance partner at Deloitte, said:

 “This small improvement in headline results is supported by bigger reserve releases* of 10%, which this year have been across a larger number of insurers. Some may question how this is sustainable, given increased regulatory focus from the PRA on reserve releases. There is also increased focus from the FCA on fairness to the customer on ancillary products and premium financing.

  

 Combined with low investment income, there is a definite need for motor insurers to react and improve their underwriting results to compensate for the reduction of other incomes. While premiums need to offset claims, there is a clear need for insurers to put the customer at the centre of their operations.

  

 “As for consumers, whilst these challenging conditions appear to indicate the possibility of rising premiums, the competitiveness of the motor insurance market means that by shopping around they may find a better price.

 Deloitte’s seminar also pointed to opportunities surrounding driverless cars and telematics in terms of risk pools and customer products.

  

 Sulabh Soral, insurance innovation lead at Deloitte, commented:

 “Driverless cars are expected to eventually reduce traditional risk pools. However, there is still significant uncertainty regarding the timeframe for when these cars will become the norm. The pace of change is highly dependent on multiple participants, so it is unlikely that we will see a ‘crash-less’ society any time soon. However, as this transition occurs our roads will see a mixture of new semi-autonomous vehicles as well as older vehicles creating heterogeneity. This presents a great opportunity for insurers to take advantage of the variability on the road, using telematics data to create new customer propositions and products that are tailored to an individual’s preferences and insurance requirements.”