Injury claims are continuing to deal a severe body blow to the prosperity of UK motor insurers, according to analysis by Towers Watson.

The consultant points to new figures published this week by the Institute and Faculty of Actuaries that show that one in four UK third party motor claims now involves a bodily injury element, a statistic only surpassed by a handful of US states.
While road usage has fallen to the lowest levels since 2005, most likely as a result of high petrol prices, the frequency of reported accidents with a third party injury claim has risen by over 6% per year since 2008.
The cumulative effect meant that private motor insurers paid out nearly £1.24 for every pound of premium they received in 2010, compared to £1.21 in 2009, based on figures submitted to the Financial Services Authority.
This was despite average price increases of 38% for new comprehensive policies during 2010, according to the Confused.com/Towers Watson Car Insurance Price Index.
Towers Watson believes that any chance of improving 2009's already disappointing industry figures were wiped out by some companies increasing reserves to guard against the worsening claims situation.
Across the private motor sector, nearly 8% of premiums (over £500 million) went towards setting cash aside to meet the cost of the UK's increasingly entrenched claims culture. This reversed the trend of the last several years where firms have typically used prior year reserve releases to improve their overall results, albeit that many companies remained in the red over that time.
However, Towers Watson believes the 2010 figures may hide some positives from the actions already taken by insurers.
Director Duncan Anderson said: "By allocating claims to the year in which they happened, the true losses for private motor business in 2010 stand at around 16 pence in the pound compared to 28 pence in the pound for accidents in 2009. Significant new business rate increases introduced in 2010 may have started to move underlying profitability in the right direction."
"The headline figures are still... bad, and private motor insurers, with a few exceptions, still have some way to go to return to profitability. While there are early signs that the actions taken so far are having an effect, it will remain important that recent emerging claims patterns, and the reasons for them, are tackled on multiple fronts. This includes using customer analytics techniques to enhance underwriting and combat fraud, as well as appropriately reflecting changing bodily injury experience in premium rating structures."