More challenging has been raising rates for personal lines, yet here too pricing is beginning to respond, particularly where motor insurers face higher expenses due to spare parts inflation and cars’ increased technical complexity. Greater investment returns as interest rates rise and as reinvestment rates surpass current yields will help and should boost future earnings.
Charles Graham, BI Senior Industry Analyst (Insurance), comments: “Europe’s largest insurers saw commercial lines’ revenue bounce back through September, with price increases extending the favourable momentum through 3Q, a trend that looks set to continue in the face of rising inflation. Volume growth also remained strong as the effects of the pandemic eased. Personal lines also improved, helped by the reopening of the travel market, and saw pricing begin to respond to increasing costs.”
Commercial lines drive P&C revenue growth
Insurance revenue’s recovery extended through 3Q for Allianz, Axa and Zurich Insurance groups, with revenues recording a strong pickup as economies recovered and travel insurance volume stirred anew with the lifting of pandemic airline restrictions. Zurich reported 13% revenue growth through September, and Allianz 8.8%, helped by increased pricing that isn’t expected to change course given inflationary pressures.
Pricing and premium volume drive revenue growth
Insurance revenue growth depends on movement in both pricing and volume. The figures published by Allianz, Axa and Zurich Insurance on a quarterly basis indicates Zurich saw the sharpest rise in prices in 1H with an average rate change of about 6%. Price increases at Axa slowed to about 4.1% from 4.7% in 1H21 while average price increases at Allianz of 4.2% were little changed on the prior year.
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