Home insurers post 89% combined ratio for 2011
UK home insurers posted a collective combined ratio of 89% in 2011, according to a study of FSA returns by Deloitte.
This was a 10-point improvement on 2010’s combined ratio of 99%.
2011 was the fourth year when home insurance premiums have met or exceeded incurred claims and expenses.
In 2007, the last year to experience widespread flooding, the net combined ratio was 120%.
The improvement came despite net earned premiums remaining flat at £6.5bn.
“Profitability improved in 2011 because it was a relatively benign year for weather-related losses compared to 2010, when the insurance industry was hit hard by the extremely cold weather that Britain experienced in the December,” Deloitte insurance partner James Rakow said. “The cost of claims arising from the floods that have swept across the country over the past few weeks will be the greatest since the 2007 flood losses, and will make insurers, reinsurers and other agencies look again at their flood modelsto check how well they predict the cost of flood claims.”
He added: “The full costs of the claims from this summer’s floods have yet to be assessed but previous experience has shown that widescale flooding can have a significant impact on the level of claims borne by insurance companies. In 2007 this pushed them into losses for their home insurance accounts.”
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