Press releases

Motor insurers see premiums fall by £400m to £13bn, but combined ratio slightly improves to 101%

26 May 2015

The volume of UK motor insurance premiums has declined by approximately £400m to £13bn in the last year, according to Deloitte.

Despite the decline, figures from Deloitte’s 25th annual motor insurance seminar found that insurers’ 2014 results slightly improved. Net combined ratios in 2014 stood at 101%, meaning the combined cost of claims and expenses was £101 for every £100 of net earned premium. This is slightly less than 2013 when the figure hit 102%. However, market premiums have been steadily declining since 2011, and it is possible that ratios in 2015 could sink to 103% and then 105% next year, suggesting insurers will face a challenging couple of years.

James Rakow, insurance partner at Deloitte, said: “This small improvement in headline results is supported by bigger reserve releases* of 10%, which this year have been across a larger number of insurers. Some may question how this is sustainable, given increased regulatory focus from the PRA on reserve releases. There is also increased focus from the FCA on fairness to the customer on ancillary products and premium financing. Combined with low investment income, there is a definite need for motor insurers to react and improve their underwriting results to compensate for the reduction of other incomes. While premiums need to offset claims, there is a clear need for insurers to put the customer at the centre of their operations.

“As for consumers, whilst these challenging conditions appear to indicate the possibility of rising premiums, the competitiveness of the motor insurance market means that by shopping around they may find a better price.

Deloitte’s seminar also pointed to opportunities surrounding driverless cars and telematics in terms of risk pools and customer products.

Sulabh Soral, insurance innovation lead at Deloitte, commented: “Driverless cars are expected to eventually reduce traditional risk pools. However, there is still significant uncertainty regarding the timeframe for when these cars will become the norm. The pace of change is highly dependent on multiple participants, so it is unlikely that we will see a ‘crash-less’ society any time soon. However, as this transition occurs our roads will see a mixture of new semi-autonomous vehicles as well as older vehicles creating heterogeneity. This presents a great opportunity for insurers to take advantage of the variability on the road, using telematics data to create new customer propositions and products that are tailored to an individual’s preferences and insurance requirements.”


Notes to editors

About the figures
The Deloitte estimates in this press release are based on data submitted by insurers in Form 20 to the Prudential Regulatory Authority, and supplemented with data from other forms in relation to gross written premium. The data represents approximately 77% of the Association of British Insurers’ UK motor revenue accounts, excluding home-foreign business. The data does not include Gibraltar based insurers, overseas insurers writing business in the UK or the Lloyd’s of London syndicates.

*Reserve releases of 10% means that the market’s combined ratio includes a 10 percentage point benefit from the restatement of claims reserves for prior accident years.

About Deloitte
In this press release references to Deloitte are references to Deloitte LLP, which is among the country's leading professional services firms.

Deloitte LLP is the United Kingdom member firm of Deloitte Touche Tohmatsu Limited (“DTTL”), a UK private company limited by guarantee, whose member firms are legally separate and independent entities. Please see for a detailed description of the legal structure of DTTL and its member firms.

The information contained in this press release is correct at the time of going to press.

Member of Deloitte Touche Tohmatsu Limited.

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