As a UK insurer decides to change gear, London looks to drive growth

It has been a big month for the UK insurance sector and the London insurance market.

The headline story in the UK and retail sector has been the news that RSA is to exit the motor market.

The company’s CEO said RSA viewed the personal lines motor market in the UK  as “extremely competitive and requires significant scale to drive meaningful outperformance”. As such RSA will exit the market, and the approximately £120 million of annual premium it generates. Customers of its MORE THAN direct motor operation will now be redirected to Swinton Insurance at renewal.

“Our primary focus now is on delivering an orderly transition that supports our colleagues and customers,” said Ken Norgrove, Chief Executive Officer, RSA UK & International. “We have incredibly talented people working in this business, and we’re committed to treating them with fairness and respect.”

Lloyd’s profit hit by poor investment performance

Elsewhere, Lloyd’s has come out fighting as it delivered an improved underwriting performance in 2022, although this was badly impacted by its investment performance.

Gross Written Premium (GWP) increasing by 19% to £46.7bn (FY2021: £39.2 billion), including 4% volume growth. 

Lloyd’s delivered an underwriting profit of £2.6 billion (2021: £1.7 billion), despite major losses contributing 12.7% to the combined ratio – including substantial claims from the conflict in Ukraine and Hurricane Ian in the US.  Lloyd’s revealed it paid out over £21 billion to customers. However, a net investment loss of £3.1 billion turned a £2.3 billion profit for 2021 into a loss of £800 million last year.

Interestingly the market also announced it is to ask syndicates to undertake three realistic disaster scenarios modelled on geopolitical tensions in South East Asia and the impact it would have on the market and its exposures. It comes after the market was surprised with the breadth of risks impacted by the Russian invasion of Ukraine. The market has also told syndicates they need to separate any coverage for cyber war risks on cyber policies from the start of April in order to understand the potential exposures to a market-wide cyber incident.

Howden sees sustainable energy and political violence as growth sectors

The London market is predicting growth with a concerted effort to secure a share of the burgeoning sustainable energy market. Broker Howden has issued its annual London Market Appetite Survey, which found that underwriters across the market are predicting big growth in sustainable energy business for the year ahead.

“In this year’s report, the stand-out class of business was Sustainable Energy,” explained Paul Cumberland, Executive Director, Howden Markets Consulting. “With energy transition and climate resilience at the top of the industry’s agenda, respondents displayed a bullish appetite for this class, with the majority of insurers planning for double-digit growth, mainly driven by new business, rather than rate, and two additional carriers considering entering the space.”

Unsurprisingly Political Violence & Terrorism is making a comeback with rate increases of 20% after a record year of social unrest, and the upheaval caused by the war in Ukraine.

Charity calls on support from the insurance sector

This month saw Autism Awareness Week with a leading care charity using the occasion to issue a call to insurers to enhance their service to neurodiverse customers.

Money and Mental Health has highlighted the barriers that many people with mental health problems face when buying and using a range of insurance products. 

The charity’s research showed that common symptoms of mental health problems can make the process of applying for, and claiming on, insurance extremely difficult. Problems with concentration and processing information, for example, can make it harder to compare and choose the right policy, or understand how to claim. 

It also found that a lack of transparency around pricing decisions, and negative experiences of disclosing mental health conditions to insurers, is contributing to low levels of trust and unnecessary distress amongst customers with mental health problems.

Conor D’Arcy, Head of Research and Policy at Money and Mental Health, said: “People with mental health problems told us about the range of challenges they can face when trying to buy insurance or make a claim. But we’ve also heard positive stories of how well-designed customer journeys and claims processes can help those of us with mental health problems to get good outcomes. That makes us optimistic that if more firms do take action, their services can become more accessible and supportive for customers with mental health problems.”

Underinsurance in the property sector

Underinsurance continues to dominate the thinking of many both inside and outside of the insurance sector, with the Building Cost Information Service (BCIS), warning the rebuilding costs for UK properties had increased by 18% in the past year. They estimate that it leaves nine out of 10 property owners having underestimated the amount of insurance cover they need to cover the rebuild costs should disaster strike. 

The increase, which is the fastest rise since 1980, means the average three bedroomed semi-detached home now costs £53,000 more to rebuild than it did in February 2022.

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