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Motor insurer losses overview:
- Who: Accounting firm Ernst & Young revealed in its UK Motor Insurance Results that motor insurers are expected to face huge losses this year.
- Why: Ernst & Young said it is attributing the expected increase in losses to high inflation, material and claims costs.
- Where: The Ernst & Young report covered the motor insurance market in the UK.
The motor insurance market in the UK is expected to record its worst yearly performance since 2010, according to Ernst & Young’s recently released UK Motor Insurance Results.
The accounting firm said earlier this week that motor insurers in the UK are anticipating greater losses this year than were previously expected, on account of high inflation, material and claims costs.
Ernst & Young said it expects “cost pressures and high damage claim levels” to continue rising into next year, meaning insurers “are likely to face another challenging year.”
“The last two years have been amongst the most difficult the motor insurance sector has faced in recent times,” said Martina Neary, the UK insurance leader at Ernst & Young, in a statement.
Neary added that 2023 recorded the highest loss in the motor insurance sector in more than a decade, which she attributed to “the culmination of high inflation, growing material and labour costs, supply chain issues, pricing reforms, and changing driving habits post-pandemic.”
Consumers have seen their motor insurance premiums increase by up to 25% over 2023, report says
Amidst the challenging times for the industry, consumer premiums are expected to increase by 25% over 2023 and an additional 10% next year while insurers adjust their pricing to reflect the impact of inflation, according to Ernst & Young.
The rise in premiums over the year equates to £118 per policy on average, according to the firm, which said the forecasted further increase of 10% next year will tack on another £58 per policy on average.
Despite warning that challenging economic conditions are expected to continue into next year, Ernst & Young revealed performance should ultimately improve, with the firm forecasting a net combined ratio of 100.4% in 2024.
“While economic challenges are expected to ease in 2024, headwinds for both insurers and consumers will remain. This means 2024 will be a balancing act for UK insurers,” Neary said.
In other car-related news, car retailer Arnold Clark notified some of its customers earlier this year that the company had been affected by a December 2022 data breach that it said exposed the customers’ personal information.
Have your motor insurance premiums increased this year? Let us know in the comments.
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