Gross written premiums within the UK private motor insurance market rose by 6.7% in 2011, slowing from the expansion recorded in 2010. The market is dominated by comprehensive policies, with some insurers having axed third-party, non-comprehensive policies in the past few years.
Significant improvements to written premiums and loss ratios were seen in 2011 as the UK's private motor insurance market continued to harden in the face of rising bodily injury claims.
Factors driving growth in the category include mandatory motor third-party liability insurance, rising disposable incomes and a steady increase in private car registrations. The difficult macroeconomic environment is a challenge.
Direct sales remain the main channel for distribution of private motor insurance, but the role of online aggregators has grown rapidly over the last five years. While price comparison websites enhance pricing transparency for consumers, intensified competition for rankings is likely to keep premium rates low.
Insurers achieving profitability last year will benefit while others face a stark choice between driving for profit and defending market share. In this environment it will be key to achieve full potential from distribution, find opportunities in customer behaviour and understand position in relation to the competition.
Of consumers surveyed that purchased car insurance from a comparison site, 37% selected the cheapest quote. The results highlighted that price is not the sole consideration when selecting policies on comparison sites, with just under two thirds of comparison-site-purchasing consumers selecting policies other than the top, cheapest result.
Ageas stood out as an insurer to watch in 2012, emerging from 2011 with a strong gain in book size and market share. Ageas' book doubled from 2010 to £1.03 billion, seeing the insurer rocket into 4th place in the market with a 9.2% share of private motor insurance business.
A strong return to growth is not expected until 2014, but as this recovery gains traction, premium growth rates in the UK 's private motor insurance category are expected to settle around 3%.
For more information on the UK private motor insurance market, see the latest research: UK Private Motor Insurance Market
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