Competition in UK Private Motor Insurance 2007

Table of Contents

DATAMONITOR VIEW

• CATALYST
• SUMMARY

ANALYSIS

• Introduction
• Legal & General ceased writing private motor insurance
  • Legal & General ceased underwriting new private motor policies in 2006
• The top 10 private motor insurers lost market share in 2006, although the market remained highly consolidated
  • Market leader RBSI maintained its grip on the private motor market in 2006
  • The top 10 private motor insurers lost market share in 2006
  • A number of the largest private motor insurers grew market share in 2006, despite competitive conditions
    • Direct Line' s GWP remained stable in 2006
    • Royal & SunAlliance raised its market share and increased premium income in 2006
    • Fortis grew its private motor insurance market share in 2006 due to an increase in policy numbers
    • NIG grew its presence in the motor insurance market, gaining market share and GWP in 2006
  • Competitive conditions resulted in some top 10 players losing market share in 2006
    • The market leader, Norwich Union, lost the most market share of the top 10 in 2006
    • Churchill lost market share in 2006 as its non-comprehensive book contracted severely
    • Zurich' s private motor GWP declined in 2006, leading to a contraction in market share
    • CIS' s market share contracted in 2006 due to lower premium income
  • Two players, UKI and esure, saw no change in market share between 2005 and 2006
    • esure joined the top 10 private motor insurers despite decreasing private motor premium income
    • UKI saw its market share increase in 2006, though premium income declined
• Mid-tier private motor insurers retained market share overall in 2006
  • Only a few private motor insurers in the 11-20 bracket managed to increase market share in 2006
    • AXA' s private motor book rebounded in 2006 increasing by a substantial 43.5% in GWP terms
    • The NFU Mutual experienced modest premium income growth in 2006
    • Aioi Motor & General increased market share and premium income in 2006
  • Five mid-tier insurers lost market share in 2006
    • LV' s market share declined by 0.3 percentage points in 2006 as it allowed premium income to contract
    • Provident Insurance' s book continued to contract in 2006
    • Groupama' s private motor insurance book declined in 2006
    • HSBC experienced a decline in its private motor account in 2006
    • Allianz' s GWP declined by more than 10% in 2006
  • Two mid-tier insurers saw minor declines in premium income but maintained market share in 2006
    • Highway' s private motor book experienced a contraction in 2006, but maintained market share
    • MMA' s market share remained stable although GWP reduced by 3.3% in 2006
• Most of the top 10 insurers write some non-comprehensive and commercial business
  • Comprehensive premium income dominated the books of the largest private motor insurers
  • Six of the top 10 private motor insurers also write commercial motor insurance
  • The largest private motor insurers also tend to be the largest total motor insurers
• The average loss ratio among the top 10 UK motor insurance providers declined in 2006 with AXA, Norwich Union and Churchill recording the biggest improvements
  • In 2006, the average loss ratio of the top 10 UK motor insurers fell by 3.3 percentage points to 71.1%
  • AXA, Norwich Union and Churchill recorded the strongest loss ratio reductions
  • Four insurers recorded loss ratio deterioration
• The average expense ratio of the top 10 UK motor insurers declined by 0.7 percentage points in 2006, with Churchill, AXA, NIG and Royal & SunAlliance recording above-average reductions
  • The average expense ratio of the top 10 UK motor insurers declined by 0.7 percentage points in 2006
  • Churchill, AXA, NIG and Royal & SunAlliance recorded above-average expense ratio decline
  • Norwich Union, Zurich and NFU Mutual recorded the highest increases in their expense ratios
• The average combined ratio of the top 10 motor insurers fell by four percentage points in 2006, with AXA and Churchill seeing significant declines
  • The average combined ratio of the top 10 motor insurers declined by four percentage points in 2006
  • AXA and Churchill recorded significant reductions in combined ratio in 2006
  • NIG, Direct Line and Zurich recorded combined ratio increases

APPENDIX

• Definitions
  • Premium income measures
    • Earned premiums
    • Gross Premium
    • Net Premium
    • Written premiums
  • Other definitions
    • Channel
    • Direct insurer/writer
    • Brokers
    • Bancassurers
    • Brandassurers
    • Platform
  • 2005-06 definitions for line of business
    • Motor
    • Total private motor
    • Total commercial motor
    • Private motor comprehensive
    • Private motor non-comprehensive
    • Motorcycle
    • Fleets
    • Commercial vehicles (non-fleet)
  • Pre-2005 definitions for lines of business
    • Motor
• Methodology
  • Primary and secondary research
  • Market size
    • Changes in market size information
    • Market size methodology
    • Lloyd' s players and underwriting result figures
  • Competitor data
    • CIS
    • GWP versus GEP reporting
    • Home-Foreign, overseas and facultative reinsurance business
• Further reading
• Ask the analyst
• Datamonitor consulting
• Disclaimer
• List of Tables
  • Table 1: Top 10 UK private motor insurers' market share in 1996, 2005 and 2006
  • Table 2: Top 10 UK private motor insurers by market share, 2002-06
  • Table 3: Top 10 UK private motor insurers by premium income, 2002-06, (£000s)
  • Table 4: UK private motor insurers ranked 11-20 by market share, 2002-06
  • Table 5: UK private motor insurers ranked 11-20 by premium income, 2002-06, (£000s)
  • Table 6: Top 10 UK private motor insurers' comprehensive and non-comprehensive shares of total GWP, 2005-06, (£000s)
  • Table 7: Top 10 UK private motor insurers' GWP split by private and commercial, 2006, (£000s)
  • Table 8: Top 10 UK motor insurers' GWP split by private and commercial, 2006, (£000s)
  • Table 9: Change in premium income compared to change in loss ratio, top 10 UK motor insurers, 2005-06
  • Table 10: Change in premium income compared to change in expense ratio, top 10 UK motor insurers, 2005-06
  • Table 11: Change in premium income compared to change in combined ratio, top 10 UK motor insurers, 2005-06
• List of Figures
  • Figure 1: The top 10 insurers controlled more of the market in 2006 than in 1996
  • Figure 2: Norwich Union remained the single largest insurer in the UK market in 2006
  • Figure 3: Insurers in the 11-20 segment showed very little difference in market share in 2006
  • Figure 4: None of the top 10 insurers wrote a substantial part of their business in the non-comprehensive market
  • Figure 5: Most of the top 10 UK private motor insurers also maintain a presence in the commercial market
  • Figure 6: The top 10 UK private insurers dominate the top motor rankings due to the size of their private books
  • Figure 7: While the average loss ratio of the top 10 UK motor insurers fell in 2006, NIG and Direct Line saw increases in their ratios
  • Figure 8: Norwich Union saw the biggest increase in private motor expense ratio in 2006
  • Figure 9: NIG saw the biggest increase in combined ratio in 2006