The insurance industry in the UK is on the cusp of finally turning itself around, as car and van insurance providers are reporting a 106 per cent combined ratio, indicating that the nation’s insurers were almost out of the red for the first time in 18 years.
Deloitte said in a recent report that the insurance industry took in around £14 billion in premiums last year after the market grew by 10 per cent, leading to a relatively small underwriting loss (‘small’ in car insurance terms, at any rate) of about £600 million. This may seem like a catastrophe, but the 120 per cent net combined ration from 2010 saw the industry losing shedloads more money, which means that things are actually looking up.
Expenses for the entire insurance industry amounted to 27 per cent of its total outgoings in 2011, which is quite low. In fact, if it were not for the amount of its funds that went to settling claims – which was a massive 79 per cent – the profits would have been glorious for nearly everyone involved.
The reason that insurers did so well can be attributed to the rate hikes that we’ve all been suffering from. However, it’s obvious that the money isn’t going to line insurance executives’ pockets, at least, as every spare pound apparently needs to be thrown at solicitors and claims management companies that are bleeding insurers dry – and by extension, their customers.
However, there are plans that are beginning to coalesce in order to get a handle on massive claims volume, especially whiplash-related claims, which experts say are responsible for £2 billion in costs in 2011 alone. Hopefully these measures will have some positive effect on the insurance industry’s bottom line to the point where they can afford to drop their rates for personal vehicles and commercial vans and trucks alike.