Skip to main content
The Actuary: The magazine of the Institute and Faculty of Actuaries - return to the homepage Logo of The Actuary website
  • Search
  • Visit The Actuary Magazine on Facebook
  • Visit The Actuary Magazine on LinkedIn
  • Visit @TheActuaryMag on Twitter
Visit the website of the Institute and Faculty of Actuaries Logo of the Institute and Faculty of Actuaries

Main navigation

  • News
  • Features
    • General Features
    • Interviews
    • Students
    • Opinion
  • Topics
  • Knowledge
    • Business Skills
    • Careers
    • Events
    • Predictions by The Actuary
    • Whitepapers
  • Jobs
  • IFoA
    • CEO Comment
    • IFoA News
    • People & Social News
    • President Comment
  • Archive

Topics

  • Data Science
  • Investment
  • Risk & ERM
  • Pensions
  • Environment
  • Soft skills
  • General Insurance
  • Regulation Standards
  • Health care
  • Technology
  • Reinsurance
  • Global
  • Life insurance
Quick links:
  • Home
  • The Actuary Issues
  • April 2012
04

UK GI market outlook stable, says Moody's

Open-access content 18th April 2012

Adequate risk-adjusted pricing and the expectation of modest real-term rate increases in most of lines of UK general insurance business mean the sector’s outlook remains stable, according to Moody’s.

2

In a report published yesterday, the ratings agency said that, with motor and property lines accounting for over 70% of the UK GI industry, their performance will impact heavily on the future profitability of the sector.

Personal motor insurance has been persistently unprofitable in recent years, Moody's said, and insurers have struggled to combat the adverse impact of bodily injury claims and claims farming, despite double digit year-on-year rate increases in recent years.

However, as these stronger rates earn through income statements, Moody's expected the combined ratio on motor insurance to improve by almost 100% over the next 12 to 18 months.

Further premium rate increases are expected for property insurance in 2012 - in nominal terms at least - as insurers seek to return personal property, traditionally one of UK insurers' most profitable lines of business, to underwriting profitability.

David Masters, a Moody's assistant vice president, said: 'Despite the fact that investment returns remain under pressure, due to low interest rates and conservative portfolios, we view the profitability trends as being sufficient to maintain a stable outlook on the sector, but insufficient to lead to a transformational change in profitability.'

Moody's said commercial rates (except fleet motor rates) remain mooted in real terms and the market has contracted from gross premiums written of £14.7bn in 2006 to £14.2bn in 2010.

It did, however, find evidence that conditions were improving, with many major insurers reporting rate increases of between 4% and 6% in commercial liability and property classes.

But Mr Masters said that the pressure exerted by the UK's 'sluggish' recovery was the main near-to-medium term downside risk for the sector and would mean insurers find it hard to grow their revenues. A prolonged economic downturn would pressure both insurers' net revenues and profits.

'Some insurance products are compulsory, for example, third-party motor insurance, whilst others such as property construction, trade and business interruption, are at least partially contingent on the level of economic activity,' he added.

This article appeared in our April 2012 issue of The Actuary.
Click here to view this issue
Filed in:
04
Topics:
General Insurance
Share
  • Twitter
  • Facebook
  • Linked in
  • Mail
  • Print

Latest Jobs

Senior Actuarial Analyst, Reserving

London (Central)
Up to £75,000
Reference
118759

Actuarial Analyst, Reserving

London (Central)
Up to £40,000
Reference
118758

Student Pricing Actuary

London (Central)
£45,000 - £55,000
Reference
118764
See all jobs »
 
 

Most-Popular

 
 
 

Sign up to our newsletter

News, jobs and updates

Sign up

Subscribe to The Actuary

Receive the print edition straight to your door

Subscribe
Spread-iPad-slantB-june.png
​
FOLLOW US
The Actuary on LinkedIn
@TheActuaryMag on Twitter
Facebook: The Actuary Magazine
CONTACT US
The Actuary
Tel: (+44) 020 7880 6200
​

IFoA

About IFoA
Become an actuary
IFoA Events
About membership

Information

Privacy Policy
Terms & Conditions
Cookie Policy
Think Green

Get in touch

Contact us
Advertise with us
Subscribe to The Actuary Magazine
Contribute

The Actuary Jobs

Actuarial job search
Pensions jobs
General insurance jobs
Solvency II jobs

© 2020 The Actuary. The Actuary is published on behalf of the Institute and Faculty of Actuaries by Redactive Publishing Limited, Level 5, 78 Chamber Street, London, E1 8BL. Tel: 020 7880 6200