The combined value of motor insurance premiums written in the UK last year totalled £13.1bn, almost £200m less than in 2011, Deloitte revealed yesterday.

According to the consultancy's analysis of data submitted by UK insurers to the Financial Services Authority, last year brought an end to the trend that has seen premiums steadily increase in recent years. Between 2009 and 2011, the total value of motor insurance premiums rose by nearly £2bn, taking the market from £11.4bn to £13.3bn.
James Rakow, insurance partner at Deloitte, said: '2012 saw premiums fall by an estimated 1.5% at a market level and may well mark the top of the underwriting cycle. Based on a Deloitte survey, motor insurance premiums are likely to fall for the remainder of 2013, which consumers will welcome. In the past, once the market starts lowering premiums it has been difficult to reverse the trend.
'During the period before the start of the financial crisis, insurers could rely on investment returns to make up the difference between premiums and outgoings. Now they will have to generate their profits from core underwriting or additional income from selling features to policies such as breakdown cover and legal assistance.'
Last year did, however, see a slight improvement in motor insurers' net combined ratio - the total cost of claims and expenses as a percentage of their net earned premiums. In 2012, this totalled 105%, which means claims and expenses totalled £105 for every £100 of net earned premium. In 2011, it was 106%.
Deloitte noted that legal changes came into effect last month that should reduce the cost and frequency of bodily injury claims, in turn improving profitability for motor insurers.
However, it claimed this was unlikely to happen as motor insurers continue to compete with each other by reducing prices and passing the benefit of any cost savings on to policyholders.