Latest news with #UKinsurance
Daily Mail
25-06-2025
- Automotive
- Daily Mail
UK Motor insurers set for losses after just breaking even in 2025, says EY
UK motor insurers are set to just about break even this year before falling to a loss in 2026, according to industry forecasters. Analysts at EY expect higher claims inflation and falling premiums, driven by heightened competition between insurers, will impede profitability. It forecasts the UK motor insurance market will have a net combined ratio (NCR) - a measure of underwriting profitability - of 100 per cent in 2025, followed by 107 per cent next year. Any number above 100 means insurers pay out more in claims and expenses than they receive in consumer premiums. EY anticipates premiums falling by 6 per cent in 2025 and increasing by 5 per cent in 2026, equivalent to a £10 saving for motorists over the two-year period. By comparison, premiums jumped by 14 per cent last year as insurers sought to offset higher costs resulting from adverse weather conditions, as well as rising raw material and spare parts costs. This helped the UK motor insurance sector achieve a combined operating ratio of 97 per cent despite paying out a record £11.7billion in claims. Premiums started going up in 2022 after the loosening of Covid-related lockdown restrictions led to people travelling in their vehicles more regularly again. While EY expects them to increase next year, it warned that car insurers will probably shrink 'deeper into the red' due to soaring claims costs. Dan Beard, UK insurance partner at EY, said: 'Following just one year of underwriting profitability in the last three, UK motor insurers are once again bracing for challenge in an increasingly uncertain market. 'The rapidly changing geopolitical, economic and regulatory picture, alongside increasing levels of consolidation, are posing very real challenges to motor insurers as they look to steer their pricing and portfolios.' 'Despite this testing environment, insurers will be keenly aware of the need to continue to support customers with better propositions whilst carefully managing costs and delivering on regulatory commitments.' EY's forecasts come amid significant consolidation in the car insurance industry. Aviva has agreed to buy Direct Line Group for £3.7billion, while Ageas intends to acquire Esure from private equity giant Bain Capital in a £1.4billion deal.
Daily Mail
20-06-2025
- Automotive
- Daily Mail
Car insurance payouts to keep rising after hitting record £11.7bn last year
UK motor claims inflation is set remain elevated over the next year after total payouts hit a record high in 2024, according to EY analysis. However, the group still expects rates paid by customers to fall thanks to a competitive market backdrop, thereby putting further pressure on insurers' margins. EY analysts forecast the average cost of motor insurance claims to rise by around 6 per cent in 2025 and 2026, with damage inflation staying high and bodily injury inflation within the 3 to 5 per cent long-term range. Motor claims hit a record £11.7billion in 2024, according to the Association of British Insurers, with the average claim up 13 per cent year-on-year at £4,900. The predicted increase comes despite a 'significant decline' in the frequency of claims, EY said. It credited this to better car safety, lower speed limits, workplace behaviour changes, and even a reluctance among motorists to make claims as a result of greater insurance costs in the UK. EY expects motor insurers' margins to hit breakeven levels this year before slipping into an underwriting loss of around 107 per cent in 2026 as rates lag behind claims inflation. A combined operating ratio (CoR) exceeding 100 indicates that insurance companies are making an underwriting loss, while a ratio below that figure denotes a profit. The UK motor insurance industry had a CoR of 97 per cent in 2024, despite paying out a record £11.7billion in claims. This was still a considerable improvement on the 113 per cent recorded the previous year when soaring claims, labour and parts costs outpaced the growth in premiums. New business rates in the UK car insurance sector shrank by 14 per cent to £757 last year, according to the Confused/WTW Motor premium index. It noted that the rates of decline had slowed from 7 per cent in the first quarter to 2.6 per cent in the following three months. WTW suggested this could be the result of greater consolidation in the UK motor insurance market. Aviva is likely to finalise the £3.7billion takeover of Direct Line Group, which is home to Churchill Insurance and vehicle recovery provider Green Flag, in July following approval from the UK's Competition and Markets Authority. Belgian insurer Ageas also agreed in April to acquire Esure from private equity giant Bain Capital in a £1.4billion deal that will create Britain's third-largest home and motor insurer.
