UK Commercial General Insurance 2006 - Market Context

Table of Contents

• CHAPTER 1 INTRODUCTION
  • What is this brief about?
  • Who is the target reader?
  • How to use this brief
• CHAPTER 2 MARKET CONTEXT
  • Introduction
  • Profits slipped in the UK general insurance market in 2005, as soft market conditions took their toll on most lines of business
    • Soft market conditions were evident in many lines of business in 2005
      • The motor market led the decline with a reduction of 1.5 per cent
      • Property and accident and health also went into decline
      • Liability and pecuniary loss continued to improve
    • The commercial market suffered more than the personal market in 2005
    • Commercial property and commercial motor led the commercial GWP contraction
  • Please note, changes to FSA Returns mean that it is now possible to estimate the commercial pecuniary loss market size. Please see the Appendix for details.
    • The general insurance market' s underwriting profit began to decline in 2005, as competition took its toll on most sectors
  • The accident and health market declined in 2005, driven by a large fall in accident sector premium income, in spite of robust growth in the group health sector
    • Group accident and health GWP increased, while the individual sector stagnated
    • The group health market drove the growth in the group accident and health sector
    • The accident and health market recorded an underwriting profit for the sixth consecutive year in 2005, but profitability declined
    • The proportion of the accident and health market written outside the company market has increased as Lloyd' s and others have increased GWP, while company players have decreased
  • The liability market achieved marginal growth, and came very close to achieving underwriting profitability in 2005
    • Competition took its toll on the liability market, though increased penetration rates in some lines secured marginal growth overall
    • The liability market almost moved into a profit in 2005 due to strong NWP growth
    • Lloyd' s and non-company players decrease in market share, but maintain a significant role in the liability market
  • The commercial and private motor markets contracted in 2005 as soft market conditions persisted
    • Sustained high levels of competition and sliding premium rates led to declines in GWP for both private and commercial motor
    • The fleet market held up in 2005, while commercial vehicle recorded the worst decline of any motor line
    • The motor market' s underwriting losses increased in 2005 due to the poor performance of the private sector
    • The commercial motor market returned a much reduced underwriting profit in 2005
    • Lloyd' s insurers have continued to reduce exposure to the motor market in 2005, a move pursued since 2001
  • The pecuniary loss market grew rapidly in 2005 and although profitability fell, it still returned a healthy underwriting result
    • The pecuniary loss market was worth £5.5 billion in 2005
    • Although the underwriting result dropped in 2005, pecuniary loss remains a profitable line
    • The market share and premium income of non-ABI companies and Lloyd' s syndicates grew in 2005
  • Following a significant slowdown in 2004, the property market went into decline in 2005 due to the performance of commercial property
    • The market' s overall decline resulted from a 7.5 per cent fall in commercial property GWP
    • Property underwriting profits fell slightly in 2005, as the effect of increased competition began to have an impact
      • Profitability declined as growth in total outgoings outstripped growth in NWP
    • The commercial property underwriting result fell by 38.6 per cent in 2005
    • Lloyd' s and other non-ABI companies accounted for an increasing share of the property insurance market in 2005
• CHAPTER 3 APPENDIX
  • Methodology
    • FSA Return changes
      • Major changes in FSA Return categories and their impact
    • Market size
      • Changes in market size information
      • Market size methodology
      • Lloyd' s players and underwriting result figures
  • 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
  • Premium income measures
    • Earned premiums
    • Gross Premium
    • Net Premium
    • Written premiums
  • Current readings
  • Future readings
  • Do you need more information?
  • SPP writing team
  • List of Tables
    • Table 1: Total general insurance GWP by line of business 2001-5
    • Table 2: Commercial general insurance market GWP and year-on-year growth, split by sector 2001-5
    • Table 3: Total general insurance underwriting result, by line of business, 1995-2005
    • Table 4: Accident & health GWP split between individual and group, 2001-5
    • Table 5: Accident and health GWP by sector, 2001-5
    • Table 6: Total accident and health underwriting result, 1995-2005
    • Table 7: Accident and Health market GWP split by UK company market players and Lloyd' s/Non-company market, 1995-2005
    • Table 8: General liability market GWP split by line of business, 2001-5
    • Table 9: Total general liability underwriting result, 1995-2005
    • Table 10: General liability GWP split between ABI members and Lloyd' s / Other, 1995-2005
    • Table 11: Motor insurance GWP split between private and commercial business, 2001-5
    • Table 12: Commercial motor insurance GWP split by line, 2001-5
    • Table 13: Total motor underwriting account, 2001-5
    • Table 14: Commercial motor underwriting account, 1995-2005
    • Table 15: Motor GWP split between ABI members, Lloyd' s / Other, 1995-2005
    • Table 16: Pecuniary loss market GWP by line of business, 2001-5
    • Table 17: Pecuniary loss underwriting account, 2001-5
    • Table 18: Pecuniary loss GWP split between ABI members and Lloyd' s / Other, 1995-2005
    • Table 19: Property insurance GWP split between household and commercial business, 2001-5
    • Table 20: Property underwriting account, 1995-2005
    • Table 21: Commercial property underwriting result, 1995-2005
    • Table 22: Property GWP split between ABI members and Lloyd' s / Other, 1995-2005
  • List of Figures
    • Figure 1: Soft market conditions were evident in many lines in 2005
    • Figure 2: The commercial market GWP declines or stagnates4
    • Figure 3: In 2005, group accident and health grew faster than the historical five year trend, while commercial property fell well below
    • Figure 4: The underwriting profit of the general insurance market deteriorated in 2005 as the market slipped off its peak
    • Figure 5: The group accident and health sector picked up in 2005, recording strong GWP growth
    • Figure 6: Individual and group accident, and ' other' accident and health business GWP fell in 2005
    • Figure 7: The accident and health underwriting result declined in 2005, but the market still returned a comfortable profit
    • Figure 8: Lloyd' s and other non-ABI companies win market share from the company market and account for the accident and health market' s expansion
    • Figure 9: The liability market achieved moderate growth, in spite of a decline in employers' liability
    • Figure 10: The underwriting result for general liability has improved sharply since 2001
    • Figure 11: Company players won market share from Lloyd' s players as the liability market saw little growth
    • Figure 12: Both private and commercial motor GWP continued to decline and have stagnated since 2001
    • Figure 13: The performance of the commercial motor market' s sub sectors diverged in 2005
    • Figure 14: Motor underwriting losses increased in 2005
    • Figure 15: Underwriting profits suffer in the commercial motor market in 2005
    • Figure 16: Lloyd' s has continued to reduce exposure to motor, with some former Lloyd' s players writing from offshore locations accounting for the increase in other
    • Figure 17: Pecuniary loss is a profitable line, and the profit recorded in 2005 is near the record for the decade
    • Figure 18: The majority of pecuniary loss insurance is underwritten by ABI members
    • Figure 19: Commercial property GWP declined in 2005, having slowed significantly in 2004
    • Figure 20: Profits fell slightly in 2005, as the effect of increased competition began to have an impact
    • Figure 21: The commercial property insurance underwriting result fell by over a third in 2005
    • Figure 22: The vast majority of property business remains with ABI companies but the amount written outside the company market has grown