Introduction

This brief contains an insightful analysis of the competitive structure of the personal insurance market, exploring significant strategic developments among the top 10 personal insurers, examining their market share and their split between personal and commercial business. Finally, the loss, expense and combined ratios are provided for the top 20 players in each line of business.

Scope

• Market share and business split analysis for the top 10 UK personal general insurers
• Performance ratio analysis, covering loss, expense and combined ratios for the top 20 insurers by line of business

Highlights

For many of the top 10 personal insurers in 2005 motor and household insurance performance pulled in different directions

Reasons to Purchase

• Benchmark your company's performance against your competitors
• Gain access to unique market share and performance ratio data

• Chapter 1 Introduction
  • What is this report about?
  • Who is the target reader?
  • How to use this report
• Chapter 2 Competitive Dynamics
  • Introduction
  • 2006 saw strong interest in mergers and acquisitions among insurers, but only one significant new entrant to the market
  • M&A activity was muted among insurers, though failed bids and speculation show insurers' continued interest
  • Only one significant new insurer attempted to enter the personal insurance market in 2006, but was bought up by an existing insurer prior to launch
  • Start-up ABC Insurance was bought by Liverpool Victoria
  • A continued focus on cost reductions led to job cuts and offshoring in 2006
  • 2006 saw a number of high profile UK job cuts as insurers continued to move jobs abroad
  • Brokers are also showing interest in offshoring
  • For many of the top 10 personal insurers in 2005 motor and household insurance performance pulled in different directions
  • Norwich Union achieved substantial growth in both private motor and household
  • RBSI subsidiaries broke with their strong growth traditions
  • Direct Line saw modest growth, outperforming its sister companies
  • UKI's private motor book decreased in size following rapid growth in recent years
  • Churchill saw reductions in private motor, and an improvement in profitability
  • A number of companies experienced very varied results in their private motor and household books, influencing their total personal premium income in opposite directions
  • Royal & Sunalliance achieved growth in private motor, while household premiums continued to fall
  • AXA experienced an increase in household and accident and health business
  • Zurich saw growth in household, but a decline in private motor was combined with a deterioration in profitability
  • Allianz's household book grew, while private motor declined
  • St Andrew's and BUPA focus on just a few personal lines
  • St Andrew's focuses on pecuniary loss and household insurance, and saw a significant increase in its household book in 2005
  • BUPA focuses on private medical insurance
  • A few personal insurers outside the top 10 are growing rapidly, heightening competition for the top players in the market
  • Of the top 10 personal lines insurers, five have large commercial books, while four are purely personal lines insurers
  • The RBSI subsidiaries and St Andrew's focus exclusively on personal business
  • Norwich Union writes more personal than commercial business
  • For the remaining companies, commercial books outstripped personal books in 2005
  • Profitability declined in the accident and health market, driven by increases in loss ratios in particular
  • Changes in FSA reporting categories have affected accident and health ratio comparisons
  • Many accident and health insurers saw loss ratios increase in 2005, but a clear divide is emerging between PMI and accident insurance specialists
  • Norwich Union, BCWA and Legal & General all recorded double digit loss ratio growth
  • Stonebridge, SimplyHealth and Fortis achieved impressive loss ratio reductions
  • Expense ratios rose by 3.0 per cent in 2005, with accident specialists driving this increase
  • While PMI providers succeeded in reducing their expense ratios, accident and travel insurance specialists more often suffered an increase
  • PMI providers BUPA and WPA had the best expense ratios in 2005
  • Norwich Union, Legal & General and New Hampshire achieved the best expense ratio reductions
  • BCWA and Stonebridge recorded large expense ratio increases
  • The combined ratio of the top A&H providers rose by 5.3 per cent in 2005, with the majority of PMI and accident providers contributing to this performance
  • The companies with the best ratio metrics were from the accident and travel sectors, not the PMI market
  • New Hampshire, Fortis and SimplyHealth all made impressive combined ratio improvements in 2005
  • BCWA had a terrible year in 2005, however GEFI, Clinicare and Groupama all suffered big combined ratio increases as well
  • Soft market conditions led to both falling premiums and reductions in profitability for many of the top 20 motor insurers
  • The loss ratio of the top 20 motor insurers increased in 2005 and soft market conditions were evident as many companies suffered declining premium income
  • Many insurers saw worsening loss ratios and reductions in income, suggesting that some have accepted reduced premiums
  • Three companies saw a decline in premium income but improved loss ratio
  • Six companies managed to improve their loss ratios while growing their motor books
  • First Alternative was the only top 20 company that combined an increase in premium income with a growing loss ratio
  • The expense ratio of the top 20 motor insurers saw a small deterioration in 2005
  • Only a few insurers saw substantial changes to their expense ratios in 2005
  • Soft market conditions led many insurers with a combined ratio already over 100 per cent to suffer further reductions in profitability
  • 11 of the top 20 motor insurers failed to return an underwriting profit in 2005
  • Many companies combined increasing unprofitability with falling premium income, suggesting that some players have cut their premiums to maintain market share
  • 11 of the top 20 returned an underwriting loss and seven of these further increased their combined ratios in 2005
  • Nine companies recorded underwriting profits in 2005, with five of these seeing improvements on their 2004 results
  • Several players have dealt well with the soft cycle so far and are set to continue riding the cycle in the future
  • Pecuniary loss is a profitable line with an average combined ratio below 100 per cent however, high expense ratios are a problem for a sub-group of insurer
  • Changes in FSA reporting categories have affected pecuniary loss ratio comparisons
  • In general the loss ratio for pecuniary loss is lower than other lines
  • The influence of the expense ratio or the loss ratio on pecuniary loss insurers' profitability varies depending on their main line of business
  • Insurers that mainly write personal creditor business have low loss ratios and high expense ratios
  • Insurers that specialize in commercial pecuniary loss generally have low expense ratios
  • The remainder of the top 20, with expense ratios around 40-60 per cent, underwrite a variety of pecuniary loss lines
  • Just over half of the top 20 pecuniary loss insurers recorded underwriting profits in 2005, making it a profitable business overall
  • Pecuniary loss is a profitable business for many insurers
  • However, a group of companies struggled to secure a profit
  • Property insurance operating conditions improved slightly in 2005, although many players saw their combined ratios increase
  • The loss ratio of the top 20 property insurers improved in 2005
  • Nine of the top 20 actually recorded an increase in loss ratio, with significant increases from several players
  • Ecclesiastical, Direct Line and Allianz all recorded large loss ratio increases
  • St. Andrew's and Norwich Union all achieved big reductions in loss ratio, going against the market trend of rising claims costs
  • Liverpool Victoria's loss ratio was the worst of the property sector's top 20 players
  • The expense ratio of the top 20 property insurers increased by 1.8 percentage points in 2005
  • Direct writers and mutual insurance companies had the best expense ratios
  • CIS, Royal & Sunalliance and Zurich all saw significant increases in expense ratios
  • Lloyds TSB and NIG achieved large reductions in their expense ratios
  • The combined ratio of the top 20 property insurers fell marginally by 0.4 per cent in 2005, driven by the performance of just under half of this peer group
  • 11 of the top 20 property insurers recorded an increase in combined ratio
  • Reflecting softer market conditions, Legal & General moved into an underwriting loss
  • Direct Line, Allianz and Ecclesiastical saw the biggest increase in combined ratio
  • Lloyds TSB, St. Andrew's and Norwich Union all achieved double digit figure combined ratio reductions
• Chapter 3 Appendix
  • Methodology
  • Competitor data
  • GWP versus GEP reporting
  • Major changes in FSA Return categories and their impact
  • Total personal and total commercial business
  • Home-Foreign, overseas and facultative reinsurance business
  • Market size
  • Changes in market size information
  • 2005 definitions for lines of business
  • Accident & health
  • Medical expenses
  • HealthCare cash plan
  • Travel
  • Personal accident or sickness
  • Motor
  • Total private motor
  • Total commercial motor
  • Private motor comprehensive
  • Private motor non-comprehensive
  • Motorcycle
  • Fleets
  • Commercial vehicles (non-fleet)
  • Property
  • Total commercial property
  • Household and domestic all risks.
  • Consequential loss (i.e. business interruption)
  • Financial/Pecuniary loss business
  • Total personal financial loss business
  • Total commercial financial loss business
  • Legal expenses
  • Fidelity and contract guarantee
  • Liability business
  • Employers liability (including the employers liability part of mixed liability packages but excluding mixed commercial packages)
  • Professional indemnity (including directors' and officers' liability and errors and omissions liability)
  • Public and products liability
  • Mixed commercial package
  • Total personal
  • Total commercial
  • Pre-2005 definitions for lines of business
  • Accident and health
  • Individual accident and health
  • Group accident and health
  • General liability
  • Motor
  • Pecuniary loss
  • Total pecuniary loss figures
  • Property
  • Ratio analysis by competitor
  • Premium income measures
  • Earned premiums
  • Gross Premium
  • Net Premium
  • Written premiums
  • Current readings
  • Future readings
  • Do you need more information?
  • Datamonitor Financial Services Consulting
  • SPP writing team
• List of Tables
  • Table 1: Top 10 personal insurance competitors by GWP and market share, 2005
  • Table 2: GWP of selected fast growing personal insurance players ranked 11-20
  • Table 3: Split between personal and commercial business for the top 10 personal insurers, 2005
  • Table 4: Premium income compared to loss ratio, top 20 A&H insurers, 2004-5
  • Table 5: Expense ratio of the top 20 A&H insurers, 2004-5
  • Table 6: Premium income compared to combined ratio, top 20 A&H insurers, 2004-5
  • Table 7: Loss ratio compared to premium income for the top 20 motor insurers, 2004-5
  • Table 8: Expense ratio compared to premium income for the top 20 motor insurers, 2004-5
  • Table 9: Premium income compared to combined ratio for the top 20 motor insurers, 2004-5
  • Table 10: Loss and expense ratios compared to GWP for the top 20 pecuniary loss insurers, 2005
  • Table 11: Combined ratio compared to GWP for the top 20 pecuniary loss insurers, 2005
  • Table 12: Premium income compared to loss ratio, top 20 property insurers, 2004-5
  • Table 13: Expense ratio of the top 20 property insurers, 2004-5
  • Table 14: Premium income compared to combined ratio, top 20 property insurers, 2004-5
• List of Figures
  • Figure 1: The top 10 personal lines insurers accounted for 54.5 per cent of the market in 2005
  • Figure 2: Four of the companies ranked 11-20 experienced fast growth in personal lines in 2005
  • Figure 3: Six of the top personal lines insurers in 2005 also had large commercial books, while four of the 10 were purely personal insurers
  • Figure 4: Many PMI players in the accident and health sector recorded an increase in their loss ratio
  • Figure 5: Expense ratio changes varied in the accident and health sector in 2005, but many PMI providers' ratios deteriorated slightly
  • Figure 6: Softening market conditions clearly affected the loss ratio of the top motor insurers
  • Figure 7: Most motor insurers saw only relatively small changes to their expense ratios in 2005
  • Figure 8: The four largest motor insurers have combined ratios below the top 20 average
  • Figure 9: Pecuniary loss insurers generally have low loss ratios, but expense ratios vary by line of business
  • Figure 10: On average property insurers increased premium income in 2005, but also saw their loss ratios rise
  • Figure 11: With the exception of a few companies like Lloyds TSB, NIG and Ecclesiastical, most property insurance providers saw expense ratios rise in 2005