PwC comments: UK general insurance - 2014 outlook

Mohammad Khan, insurance partner, PwC, comments:

"2013 has been a very benign year - especially for personal household and property insurance - which is good news for consumers as it should lead to lower premiums. Despite the St Jude's storm and the coastal surge flooding we had earlier this month, household and property insurance have had their lowest claims levels for a long time. In 2014 we anticipate that premium rates will continue to fall in personal and commercial household insurance, generally by between 5% and 10%. The only exception to this would be premiums for businesses that were exposed to the two large losses which may see significant increases in excesses or premiums as they are not covered by the industry's Flood Re initiative. There is the potential that small businesses that are impacted by floods or storms may not be able to afford to renew their insurance and may consequently be at significant risk of further floods or storms.

"Although motor insurance bodily injury claims are still experiencing significant inflation, the number of accidents is dropping. There is also continued greater competition in the personal lines motor market and we would anticipate that premium rates, again, will continue to fall across the market in the early part of 2014. Rates have been falling for over a year now, with a blip for young female drivers following the introduction of the gender directive. It is too early to tell whether competition will continue to drive down premium rates in the personal lines motor market in the second half of 2014.

"The Commercial liability market is currently suffering from over-capacity. Although the market is quite soft and claims experience is not benign, we anticipate that the flat rates will continue into 2014."

Dom del Re, insurance catastrophe expert at PwC comments:

"The storms so far in 2013 have not caused significant losses to the insurance industry, but we are still in the height of the season and more could come - in 1998 the Boxing Day storm was one of the most severe the UK has experienced. In 2014 we will be getting more clarity on the impact that Flood Re will have on the flood insurance landscape. We should expect significant changes and companies, both in commercial and personal lines, can do more to understand how their management and appetite for this risk must respond to the changes. Modelling will be a key component of this."

 

ENDS

 

Miranda Ward

PwC | Financial Services PR
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