Andy Watson reveals that climbing claims costs is creating pricing pressure.

Chief executive at multinational insurer Ageas Andy Watson has said that premium levels in the UK remain unsustainable in the wake of continued claims inflation.

Watson was speaking after the underwriter posted its results for the first nine months of the year. His views support those of competitor Allianz, which stated that the cost of claims was climbing faster then inflation.

Watson said: “I’m pleased to say that the large loss severity we reported in our motor book in the first half of the year has now returned to more normalised levels.”

Ageas reported a net profit of £58.2m for the first nine months of the year, compared to a profit of £54.2m for the same period in 2018. Its combined ratio also fell to 97%, a reduction of 0.5%.

Pricing pressure

However, Watson said the rising cost of claims was putting pressure on pricing.

“We have maintained our disciplined approach to underwriting and pricing in a dislocated motor market, which has had a natural impact on volumes,” he explained.

“While there is much speculation about price increases, premiums in the market remain surprisingly low and unsustainable given inflationary pressures and the change in the Ogden rate.”

Allianz chief executive Jon Dye added: ”There are some challenges ahead, not least the financial impact of claims inflation, but with the support of our broker partners [and] underwriting for profit approach, this can be managed.”