For the first time in fourteen years, UK motor insurers are set to make a profit. In 2009 a small profit is forecast as the income from premiums will outstrip the cost of claims for the first time.
The rise of personal injury claims has seen the cost of claims across all sectors rise significantly for a number of years. In addition to this the fierce competition in this market has meant the cost of premiums has stayed low to retain market share.
The UK consumer is price driven when choosing motor insurance, especially when buying online. The insurance companies have had to compete purely on price making the cost of premiums less than the cost of a claim.
If the prediction is right it could drive down the cost of motor insurance as the underwriters see a small profit for the first time in fourteen years.
The author of the report Andrew Haslip said: “While insurers have needed to raise their prices, they’ve been unable to do so due to the level of competition between insurers and the fact that the vast majority of consumers buy on price.”
Tough competition within the market will see the profit disappear again by 2010. UK customers are driven on price when choosing their motor insurers.
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