A report by Tower Watson and price comparison site Confused.com has found that car insurance premiums dropped an average of 5.1% in the UK over the last quarter, meaning that rates have fallen by a total of 10.3% since September 2011.
The drop is the biggest since the index began five years ago. Duncan Anderson of Towers Watson, said: ‘Despite this being the fifth successive quarter of flat or falling rates for comprehensive cover, I think the current scale of the annual and quarterly decreases will – and probably should – cause some pause for thought in the insurance industry.’
The survey also found that the largest decrease in rates was seen by young female drivers, suggesting that insurers are attempting to minimise the impact of the future price increases that will affect many women once the new legislation regarding gender pricing comes into effect on December 21st.
“We hear a lot in the media about high insurance premiums, particularly with the price increases scheduled for women drivers, so it is interesting to see that prices have actually fallen over the past 12 months,” comments Dr Geraldine Kaye of GAAPS Actuarial.
Global insurance prices increased by 0.9% in the third quarter of 2012, continuing the gradual increases that began in the second half of 2011
The latest quarterly insurance market briefing by Marsh, also found a 1.4% increase in renewal rates in the third quarter. This was the same level as seen in the second quarter, which Marsh said was evidence that price increases might be stabilising.
Andrew Chester, chief executive of the firm’s placement brokering division Bowring Marsh, said: ‘While the global insurance market continues to be in a state of clear transition, the results for individual insureds vary significantly. With capacity and appetite for well-managed risk still strong, insureds are still able to achieve favourable results on renewal in many lines of business.’
Insurance rates for financial and professional business rose by an average of 1.9% for renewals in the third quarter. In particular, concerns over the eurozone crisis among underwriters saw financial institutions in every major eurozone country experience increases in their liability insurance rates.
Casualty insurance rates rose by an average of 1.2% globally – higher than the 0.8% increase seen in the second quarter of 2012. However, a lack of natural catastrophes so far this year has helped to stabilise property insurance rates.
A poll into the use of telematics by drivers has found that more male drivers are willing to have their vehicle monitored for insurance purposes than women.
The survey found that 60% of men would be interested in using a device compared to only 40% of women. This is despite the ruling that insurers will no longer be able to use gender to assess insurance rates, causing women’s insurances prices to rise this December.
Duncan Anderson, global head of property, casualty insurance pricing and product management at Towers Watson said: ‘With the ban on the use of gender in setting insurance prices from December 21, young female drivers could materially benefit from the use of telematics.”
44% of all drivers identified insurance discounts as the most attractive benefit of using a telematic device.
The rating outlook for the UK life assurance sector remains stable, according to a new report by statistical rating organisation Fitch.
Fitch’s latest outlook assumes a weak economic recovery, with modest GDP growth. It is yet to account for shocks to the economy, but can be updated if unexpected events were to occur.
Fitch’s insurance team senior director David Prowse said: “In contrast to several European insurers, most UK life insurers have negligible direct exposure to the sovereign debt of Greece, Italy, Ireland, Portugal and Spain – typically less than 5% of shareholders’ equity.”
Research from MetLife shows that the average number of life threatening experiences during an adult life is one. However, 19% of people who took part in the nationwide survey had twice suffered a near death experience – and 8% had suffered three or more.
Most life threatening accidents took place on the road: 35% were involved in potentially fatal car crashes, while 11% have nearly died riding bikes or motorbikes. Whilst the majority of accidents took place on the road, one in ten adults was involved in a dangerous accident whilst at home or work.
This research underlines the importance of providing life insurance for staff through employee benefits schemes.
Stephanie Baillie, Employee Benefits Director of MetLife UK said “Risk is something we all live with day to day and life-threatening experiences are unfortunately relatively common. It is reassuring to know that in many cases people survive them. Sadly it is not always the case and insurance cover that protects against life’s uncertainties is absolutely essential and valuable if it is part of a well-designed employee benefits package.”
We all know that people are living longer, which impacts on many areas of welfare, society and finance. Fraser Smart, Managing Director of Buck Consultants, discusses the data from the 2011 census:
“Much of what this data reveals should come as no surprise to those of us in the pensions industry, people in England and Wales are living longer than they did 100 years ago. There is a decreasing proportion of the population that is aged under 15 and an increasing proportion that is aged 65 and over. The percentage of residents aged 65 and over was the highest seen in any census at 16.4 per cent, which means that one in six people in the population was 65 and over in 2011. In 1911, the figure was one in twenty.
“Very worryingly the number of active members of occupational pension schemes is at the lowest level since the 1950s. Employee membership of employer-sponsored pensions in the private sector fell from 46% in 1997 to 32% in 2011. In 2010 the average worker in a private sector defined benefit pension scheme contributed 5.1% of salary to their pension, compared with 2.7% for employees in defined contribution occupational pension arrangements.
“Great news we are all living longer, as no doubt we all wished for. However, this has now come to the attention of those in authority and, with an ever increasing percentage of the population relying on pension income. We are awaiting with interest the Government’s proposals on defined ambition pensions which are expected later this year. Radical reform of pensions arrangements are needed to meet the needs of a growing population of pensioners in the wake of the disappearance of final salary pension schemes.
“I would love final salary schemes to make a comeback, but the reality are that most are in their endgame paying out benefits rather than accruing new liabilities. Will the Government be brave enough to remove the shackles which led to a large extent to the disappearance of final salary schemes? We will have to wait and see.”
UK household insurers had a good 2011 – but floods will have an impact
Figures show that 2011 was the fourth consecutive year when UK home insurance premiums either met or exceeded the cost of claims and expenses.
Home insurers in 2011 posted a net combined ratio of 89. In 2007, the most recent year to experience widespread flooding, the net combined ratio was 120.
James Rakow, insurance partner at Deloitte who compiled the figures comments “At an industry level, the size of the home insurance market remains stable with annual premiums worth about £6.5bn. Profitability improved in 2011 because it was a relatively benign year for weather-related losses compared to 2010, when the insurance industry was hit hard by the extremely cold weather that Britain experienced in the December.
“The cost of claims arising from the floods that have swept across the country over the past few weeks will be the greatest since the 2007 flood losses, and will make insurers, reinsurers and other agencies look again at their flood models to check how well they predict the cost of flood claims,” he adds.