UK Commercial Motor Insurance: Market Dynamics and Opportunities

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Jul 10, 2014, 09:46 ET

NEW YORK, July 10, 2014 /PRNewswire/ -- Reportlinker.com announces that a new market research report is available in its catalogue:

UK Commercial Motor Insurance: Market Dynamics and Opportunities

http://www.reportlinker.com/p01598743/UK-Commercial-Motor-Insurance-Market-Dynamics-and-Opportunities.html

The commercial motor insurance market has had to push against a "new normal" of lackluster growth, fighting conditions where rate increases beyond a "head above water" level remain difficult. At the same time, the market faces a number of issues including personal injury claims, hardened reinsurance rates, and the uncertainty of the impact of LASPO.

Scope
- Compare a whole market view, informed by a series of insurer interviews, against your own experience and expectations.
- Develop strategies to approach opportunities arising in the market, and prepare for emerging challenges.

Highlights
Insurers reported rate increases of 5–7% across the commercial motor market from the tail end of 2012 into 2013. Expectations for the full year 2013 are that this will have developed toward increases of 6–9%, falling shy of the double figure target.

Insurers are very much in a "'wait and see"' mode within regards to the impact of the LASPO Act.

The number of buses and coaches has fallen for seven successive years, and there are now 7% fewer buses than the peak in numbers seen in 2005. Heavy goods vehicle numbers have also been in decline for the past five years, but at a more marked pace than that seen for buses.

Reasons to purchase this report
- How did the market perform in 2012, how is it expected to perform in the future, and how does this compare when benchmarked to your experience?
- What are other insurers in the market most concerned by, and may there be consequences you haven't considered?

EXECUTIVE SUMMARY

•Written premiums in the market grew by 6% in 2012
•The commercial motor parc is in slow decline
•Insurers are eyeing double figure rate increases in 2014
•The market is expected to reach GWP of just under £5.5bn in 2017
•The commercial motor market's COR improved in 2012
•Reinsurance rates have hardened significantly
•The jury is still out on the impact of LASPO and other measures
•Insurers still hounded by injury claims despite improving road safety

Market Review

•Commercial insurers face tricky conditions in which to raise premiums
- The UK's sluggish economic growth continues to impact on the industry
- Opportunities exist for insurers to support on-the-road costs for businesses

•The commercial motor parc is in slow decline- HGV and bus numbers have been slipping for a number of years
- The South East is home to a strong proportion of both the UK's LGVs and HGVs

•Pricing action in 2012 saw a 6% growth in GWP- Written premiums in the market grew by 6% in 2012
- The commercial fleet outperformed the rest of the market in GWP growth
- Pricing action has varied based primarily on claims experience
- Insurers are eyeing double figure rate increases in 2014
- Commercial brokers are cautiously optimistic regarding rate rises in 2013
- The market is expected to reach a GWP of just under £5.5bn in 2017

•The commercial motor market's COR improved in 2012- The market's COR improved in 2012 but it is not expected to break 100%
- A rising market expense ratio cost the market a greater improvement
- Reserve releases are obscuring a less positive market performance
- Reinsurance rates have hardened significantly

•Commercial vehicle insurance is purchased by at least one third of SMEs in each industry group- One in six SMEs hold fleet motor insurance
- SMEs within the manufacturing industry are most likely to purchase commercial vehicle and fleet insurance

Issues, Developments, and Regulations

• The jury is still out on the impact of LASPO
•Greater debate on whiplash is welcome but there is a long way to go
•A change in the personal injury discount rate would force a rate step-change
•Aggregators are a growing influence in the smaller business segment
•The scrapping of motor insurance certificates could create savings for insurers
•Insurers still hounded by injury claims despite improving road safety- Insurers report inflation in injuries per accident
- Road safety funding levels may endanger improving RTA figures
- The Olympic effect sees increased cyclist claims
- Older vehicles being driven harder could increase insurer exposure

Appendix

•Definitions- Accident year combined ratio
- Brokers
- Direct insurer/writer
- Earned premiums
- Gross premium
- Net premium
- Reported year combined ratio
- Reserve development
- Written premiums

•Methodology- Primary and secondary research
- Datamonitor's 2012 SME Insurance Survey
- Datamonitor's 2012 Commercial Broker Survey

•Further reading

LIST OF TABLES

•Table: Licensed vehicles by body type (000s), 2008–12
•Table: New vehicle registrations (000s), 2008–12
•Table: Licensed LGVs by region (000s), 2008–12
•Table: Licensed HGVs by region (000s), 2008–12
•Table: Commercial motor insurance GWP (£m), 2008–12
•Table: Commercial motor insurance GWP forecast (£m), 2012–17f
•Table: Commercial motor insurance market COR (%), 2009–12
•Table: Commercial motor insurance accident and reported year COR, 2008–12
•Table: SME purchasing of commercial motor insurance, by industry, 2012

LIST OF FIGURES

•Figure: High unleaded and diesel prices add to the burden of on-the-road costs
•Figure: Commercial vehicle numbers have stagnated in the past five years
•Figure: New registrations for commercial vehicles have slipped since 2008
•Figure: The South East, North West, and West Midlands hold the most licensed HGVs
•Figure: Commercial motor insurance GWP recorded a 2008–12 CAGR of 5.1%
•Figure: The greatest premium growth in 2012 was found in the commercial fleet
•Figure: Over half of brokers experienced no rate growth in fleet over the past year
•Figure: One in five brokers expect light commercial vehicle rate growth of 5–10%
•Figure: Just under half of brokers expect heavy commercial vehicle rate rises
•Figure: The commercial fleet is expected to achieve a 2012–17f CAGR of 6.4%
•Figure: Market COR improved in 2012 due to a 4.6% decrease in loss ratio
•Figure: The market has released reserves for four of the last five years
•Figure: Purchasing of SME motor insurance is greatest in manufacturing
•Figure: ABI figures highlighted rising claims frequency in 2012
•Figure: The cost of claims has been rising year-on-year since 2009
•Figure: Road traffic accident figures have improved every year since 2004

Market Review

•Commercial insurers face tricky conditions in which to raise premiums - The UK's sluggish economic growth continues to impact on the industry
- Opportunities exist for insurers to support on-the-road costs for businesses

•The commercial motor parc is in slow decline- HGV and bus numbers have been slipping for a number of years
- The South East is home to a strong proportion of both the UK's LGVs and HGVs

•Pricing action in 2012 saw a 6% growth in GWP- Written premiums in the market grew by 6% in 2012
- The commercial fleet outperformed the rest of the market in GWP growth
- Pricing action has varied based primarily on claims experience
- Insurers are eyeing double figure rate increases in 2014
- Commercial brokers are cautiously optimistic regarding rate rises in 2013
- The market is expected to reach a GWP of just under £5.5bn in 2017

Companies Mentioned

Bunzl plc, Business Integration Services Ltd., General Mills, Inc., Hutchison 3G UK Limited, Informa plc, Schindler Holding Ltd., Wolters Kluwer nv

To order this report: UK Commercial Motor Insurance: Market Dynamics and Opportunities
http://www.reportlinker.com/p01598743/UK-Commercial-Motor-Insurance-Market-Dynamics-and-Opportunities.html

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