The Actuarial Profession says 'substantial increases' are needed to ensure 2011 profitability
Private motor insurers will need to raise rates by up to 30% to make an underwriting profit for 2011, a leading actuary predicts.
The Actuarial Profession’s third-party motor insurance working party chairman David Brown said the rises would be partially fuelled by claims inflation, expected to run at around 15% for comprehensive insurance.
Brown was looking at the year ahead following the publication of the Confused.com/EMB Insurance Price Index, which showed that premiums rocketed 38.2% in 2010, treble the rise recorded in 2009.
Brown, who led an influential Actuarial Profession report last year into bodily injury claims inflation, said: “If you take a slightly less onerous objective, which is to say the business that you write in 2011 should be profitable, then you’re talking about increases that would certainly be in the 20s and maybe as high as 30%.
“You are talking about very substantial increases based on the working party and the indications of inflation that are coming from there.”
Brown said even higher rate increases of up to 40% would have to be pushed through to make financial results profitable in 2011, chiefly because of claims coming through from last year.
But Ageas underwriting director Adam Clarke predicted rate rises lower than last year, with insurers pushing through different increases depending on how early claims inflation had been recognised.
• Elsewhere in the motor market, MMA remains locked in takeover talks with advisers of Halifax-based Provident Insurance despite a three-month period of exclusivity recently expiring. The French insurer is still keen on a deal, thought to be worth around £70m.