Motor fell 12% - but SME and home premiums rising
Soft motor rates caused by the market over estimating how much they would save in claims payouts from legal reforms pushed down premiums at LV= at the start of the year.
Although the number of motor policies at the mutual held steady at 3.1 million in the three months to 31 March 2014, gross written premium (GWP) from private motor tumbled 12% to £254m.
In total, LV= wrote £363m GWP in the period – 4% less than the £379m it wrote in the first three months of 2013.
It wrote £151m through broker channels and £212m direct.
Increases came from SME and home insurance, which respectively rose 20% to £54m GWP and 22% to £45m.
An increase in non-motor customers brought its total policy count to 4.5m.
Group chief executive Mike Rogers said the growth of home and SME insurance was in keeping with its strategy to move away from motor and into other business lines.
He added: “In motor, rates continue to be competitive and challenging, and this is reflected in the decrease in gross written premiums, with average remiums reducing and margins eroding.
“We expect motor rates to start to increase during the latter part of the year as we believe that certain segments of the market have over anticipated the reduction in claim value as a result of the Laspo [Legal Aid, Sentencing and Punishment of Offenders] legislation.”
The mutual insurer does not disclose profitability in its quarterly trading updates. Last year its general insurance business made a £77m pre-tax profit, down 29% on the £109m it made in 2012 because of falling investment returns.