The motor insurance market has suffered underwriting losses of £5bn over the past seven years, says Standard & Poor's.
The motor insurance market has suffered underwriting losses of over £5bn over the past seven years. That's the stark conclusion of a Standard & Poor's report.
Standard & Poor's credit analyst David Laxton said: "Having failed to reach 'breakeven' or report a profit since 1994, the market is in a difficult situation.
"Investment income earned by the market will have mitigated the underwriting losses in part, but will in no way have covered them, leaving insurers with very significant operating losses."
S&P suggested that a return to profit by the end of 2002 is possible, but made it clear the market's long-term profitability is unclear.
While the resurgence of competition has benefited motorists, insurers's long-term profits are being wiped out it said.
The findings will come as a blow to motor insurers who are expecting lower combined ratios.
However Laxton warned: "A further significant slowdown in growth during 2002 and 2003--alongside recent evidence of an increase in claims costs--could reverse even the near-term forecast for profitability."
