Competition in UK Commercial Motor Insurance 2007

Published by: Datamonitor

Published: Feb. 14, 2008 - 33 Pages

Table of Contents

DATAMONITOR VIEW

CATALYST

SUMMARY

ANALYSIS

Introduction

A few new competitors entered the market in 2007

Direct Line entered the commercial market with an SME targeted proposition in 2007

LV's broker arm ABC Insurance launched its first products in 2007 with commercial motor policies to follow

Underwriting agency Arista rolled out multiple products for the commercial motor market in 2007

Many top 10 commercial motor insurers experienced shrinking books in 2006

The market remained highly concentrated despite the top 10 losing market share

The soft market led to a reduction in market share for four of the top 10 commercial motor insurers in 2006

Norwich Union continued to lose market share in 2006

Zurich experienced a contracting book in 2006, leading to a decline in its commercial motor market share

Allianz suffered a decline in its commercial motor market share in 2006 due to the competitive market

Brit's market share declined marginally as premium income fell by 3.4%

Four top 10 commercial motor insurers increased market share in 2006

NFU Mutual expanded its commercial motor book in 2006, leading to an increase of market share to 5.5%

QBE increased market share in 2006 by maintaining its premium income despite soft market conditions

AXA increased market share in 2006 by rebuilding its commercial motor book

NIG grew its market share by 0.4 percentage points in 2006 and achieved growth of 10.9% in GWP

Two competitors saw no change in market share in 2006

The market leader Royal & SunAlliance maintained its market share in 2006 at 18.2%

Highway pursued a more selective commercial motor strategy in 2006 that led to a decline in premium income

Mid-sized commercial motor insurers gained market share in 2006

The majority of insurers ranked 11-20 gained market share in 2006

Tradex and CIS lost market share in 2006, while St Paul and Ecclesiastical saw no changes

Tradex declined to 1.5% of the commercial motor market in 2006

CIS's market share in commercial motor declined in 2006

St Paul and Ecclesiastical's market share was unchanged in 2006

A majority of the top 10 have mixed motor insurance portfolios

Fleet premium income dominated the commercial motor books of the largest insurers in 2006

The top 10 commercial motor insurers are also active in the private motor market

Private motor dominates the books of the top 10 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

Definitions of ABI terms

Brokers

National brokers

Other intermediaries & brokers

Chain brokers & telebrokers

Direct

Other company agents

Utilities/retailers/affinity groups

Company staff

Banks/building societies

SME

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

Home-foreign, overseas and facultative reinsurance business

Further reading

Ask the analyst

Datamonitor consulting

Disclaimer

List of Tables

Table 1: Market share of the market leader, the rest of the top 10 and the remainder, 1996, 2005, 2006

Table 2: Top 10 commercial motor insurers by market share, 2002-06 (%)

Table 3: Top 10 commercial motor insurers by premium income, 2002-06 (£000s)

Table 4: Commercial motor insurers ranked 11-20 by market share, 2002-06 (%)

Table 5: Premium income of commercial motor competitors ranked 11-20, 2002-06 (£000s)

Table 6: Top 10 commercial motor insurers' fleet and commercial vehicle shares of total GWP, 2006 (£000s)

Table 7: Split between commercial and private markets for the top 10 commercial motor insurers, 2006 (£000s)

Table 8: Top 10 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 commercial motor insurers have grown their share of the market since 1996

Figure 2: The top insurers retained a firm grip on the market in 2006 with a 76.3% market share

Figure 3: Mid-tier competitors accounted for 10.5% of the commercial motor market in 2006

Figure 4: Most of the top 10 commercial motor insurers' books are dominated by fleet business

Figure 5: Most of the top 10 commercial motor insurers also have a large presence in the private market

Figure 6: The top 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

Abstract

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