Driving for profit: A view of the UK private and commercial motor insurance markets 2013

In this year’s edition of Driving For Profit we present the results of our analyses of the performance of the Private and Commercial Motor market in the UK.

Starting with UK Private Motor, the overall performance of the market in 2013 has resulted in a pre-tax net insurance ratio of 3.4%. This ratio has been highly distorted by the large prior years’ reserve release made by the Direct Line Group. Overall performance (including reserve releases from prior years) of the UK Commercial Motor market has deteriorated in 2013 to a pre-tax net insurance ratio of -6.9% (from -5.7% in 2012), following an improvement in performance from its trough in 2009. The causes of the deterioration in 2013 were twofold: deterioration in the operating loss for current year business; and strengthening of prior years’ reserves.

In this Market View, we review some of the statistics behind the recent performance of the UK Private and Commercial Motor insurance markets. In particular, we consider market profitability, premium rates, claim frequency and average size, and comparative performance of major players in the markets.