Record insurance reserve releases protect UK motor insurance profitability
Deloitte’s analysis of Financial Services Authority (FSA) returns has found that in 2006 motor insurers had a net operating ratio of 101.4%, the sixth year of clear operating profit. However, the headline results mask a significant downturn in underlying operating performance, as insurers released more than £800m from their reserves to offset poor underwriting experience.
In total the UK insurance market experienced an underwriting loss of £120m across its commercial and personal motor insurance products, according to analysis presented by Deloitte at its annual motor insurance seminar. The £120m loss compares to £200m in 2005 and £70m in 2004. The loss is blamed on low premium growth (1.3%) and high claim costs.
The total loss was made up of an underwriting profit of £180m for commercial lines and a £300m loss on personal lines. Deloitte’s analysis shows that
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