The following is probably going to come as a surprise to most of you but did you realise that the market for car insurance premiums is falling here in the UK? Well, it is!
This may seem strange to you when the majority of people receiving their annual car insurance renewal notices open them to find that yet again their car insurance premiums are increasing. On that basis you would have thought that the level of premium income would be rising – not the case.
Some interesting facts are that in 2012 the level of car insurance premiums dropped by around £200 million when compared with 2011 and it is forecast that this trend is expected to continue throughout 2013.
This information was released at Deloitte’s 23rd Annual Motor Insurance Seminar show. It was also revealed that premiums amounting to £13.1 billion were paid in 2012 and that between the years 2009 to 2011 the amount of premiums increased from £11.4 billion to £13.3 billion per annum – almost a £2 billion increase.
Furthermore, the motor insurance market’s combined ratio showed an improvement in 2012 by achieving 105%. In 2012, the figure was 106% so only a modest improvement but an improvement no less. This represents a combination of expenses and claims of £105 for a net earned premium of £100. This would indicate that car insurers are struggling to operate profitably.
So, what could have caused the level of premiums to drop? Perhaps, there are fewer people driving cars due to the current economic climate as many people have had to sell them as the cost of fuel and maintaining their cars has become prohibitive? Or could it be that more people are shopping around for their car insurance and getting cheaper deals with other car insurance companies? Perhaps it could be a combination of the two?
What are your thoughts?