Motor insurers braced for £1bn loss
The motor insurance industry could make underwriting losses of up to £1bn in 2009 without the support of prior year releases, says international accounting and consultancy firm Deloitte.
It predicts the £12bn motor insurance industry will make insurance losses in 2009 and throughout 2010.
Deloitte estimates that motor insurers would need to increase their premiums by 5% in an effort to replace the income lost from lower investment returns.
Insurance associate partner at Deloitte, James Rakow, said: "In 2009 I don't think that insurers will be able to rely on investment performance to save them from making a loss."
"Results at a headline level for UK motor insurers have shown this market cruising along at close to underwriting break-even point from 2001 to 2007.
"In 2008, the headline net operating ratio was 105%. In other words motor insurers were making an underwriting loss of £5 for every £100 of premium. In 2008 investment market conditions were good enough for insurers to recoup this underwriting loss and make a small insurance profit."