Motor premium rates are showing continued recovery at Lloyd's of London, according to a survey by SBW Insurance Research.
The sharpest up-swing has been in fleet motor rates which have risen 22% in the year to 1999.
Explaining the increase, Miles Trotter, director of SBW, which is part of Lloyd's group Amlin, said underwriters appeared to have suffered a very poor loss experience in the fleet sector and have reacted accordingly.
Private car premiums have also gradually increased, while rates in the market as a whole climbed by nine per cent between 1998-9, said the report Rating Trends and Underwriting Margins – September 1999.
However, the authors are unsure whether this improvement will be enough to keep pace with claims inflation and restore underwriting profits.
SBW analysts said: "Underwriters forecast that rate increases have arrested the decline in margins but have been insufficient to return the sector to underwriting profit."
Earlier this year, actuaries Bacon and Woodrow suggested the UK motor market would ultimately lose £1.2 billion in 1998, repeating a similar size loss for the previous year.
They said rates must rise by a further ten per cent to restore profitability.
Higher court awards in bodily injury cases, SBW said, are partly to blame for fuelling claims inflation.
Rates in the non-marine market, meanwhile, are continuing to fall but the rate of decline has slowed considerably in 1999.
The worst areas remain property catastrophe business and specialist casualty lines such as professional indemnity and directors' and officers' lines, which continue to suffer from severe competition.
The report said: "Some companies are continuing to underprice business to capture market share, undermining efforts to force prices up."
But SBW analysts went on to stress: "To date the market has not reached the low point that it did in the early nineties."
SBW expects underwriting margins to reduce in 1999 but a small profit is still forecast.
In other sectors of Lloyd's competition remains intense.
In aviation, the loss experience has been described as "poor" and both the aviation and space markets continue to be plagued by overcapacity.
But, there are signs that space premiums are increasing for year 2000 launches.
Marine is proving to be the most competitive market in Lloyd's.
Hull, energy and war business premiums are leading the market downwards.
Tight market conditions and poor underwriting experience have been reported by marine insurers worldwide. Only in the marine excess of loss market have there been indications of any improvement.
However, margins have been falling since 1995, and are forecast to fall again this year.
