Insurer survey confirms desire to increase UK commercial premiums
LONDON.– Some 92% of underwriters expect motor insurance premiums for UK companies to increase in the first quarter of 2009, according to the Aon’s Market Pulse. Launched today by the UK’s leading insurance broker, the quarterly index will track UK underwriters’ premium predictions for property, liability and motor fleet insurance. The insurers surveyed underwrote £23.5 billion worth of premiums for UK companies in 2008.
Movement in motor fleet premiums is a strong indicator of how other types of insurance are set to follow. Aon’s research supports this with 74% of underwriters believing property rates will increase in the next three months and 69% expecting liability premiums to also rise.
Insurers are looking to make up for three to four years of offering competitive rates. Now, poor profits, the rising cost of claims and the challenges of the tough economic environment are driving the expectation of rate increases in 2009.
Steve Redgwell, head of broking director for Aon’s mid to large sized UK companies, said: “We are hearing very strong messages from insurers about rates rising but these have not yet manifested themselves into actual increases. However, UK companies must be aware of and prepare for the imminent shift in insurance market conditions that could affect their cover and premiums. For example, we are already seeing challenges in capacity available for certain industries, such as the food sector. Also, insurers are placing greater attention over the commitment and focus of businesses on the management of risk where the trend is that of a high volume of losses, such as in the retail sector.
“But underwriters are still hungry for new business and it is possible for companies to achieve highly competitive rates – as long as businesses can evidence that they are committed to and have a culture of good risk management. Insurance brokers must continue to work with their clients and insurers to provide the quality of information they need to obtain broad and competitively priced cover for UK companies. This especially rings true as, when we look further ahead, 92% of underwriters expect liability rates to rise over the next six months so good insurer relationships are crucial in helping keep rates down at a time when companies need to control costs.”
Underwriters’ comments from the survey include:
· “By the middle of 2009 we would expect the market to have hardened significantly. This will present challenges. Companies will be looking to minimise expenditure due to their own financial pressures – at the same time insurers will be forced to increase rates.”
· “We are expecting a rise in claims together with the economic downturn to contribute to the hardening of the insurance market in 2009.”
· “Well managed risks will remain competitively priced but there will be premium increases of 10%+ for poor and unmanaged risks.”
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