Evidence of U-turn as price cutting begins among leading motor insurers
Norwich Union (NU) has performed a U-turn on motor rates, reversing recent price rises by dropping prices by up to 3% over the last few weeks.Though the insurer denied it had made any significant changes to its intermediary rates, independent sources said NU had realigned comprehensive policy prices to the rest of the market after trying to lead the market up three months ago.A source said: "Putting prices up just didn't work for Norwich Union. It tried to lead the sector out of the soft market but just lost share instead."Figures obtained by Insurance Times show NU dropping prices by 3% across a basket of around 15,000 risks.Other insurers pinpointed as dropping prices across their portfolio of motor risks include Provident, MMA and Groupama.Though Provident declined to comment, independent sources confirmed the insurer had dropped its comprehensive motor rates by 3% over the last few weeks and up to 10% over the year.MMA and Groupama confirmed they had implemented some price changes but both put this down to more sophisticated pricing algorithms, rather than sweeping price cuts.Groupama director of motor Jack Brownhill said: "We have moved some of our rates in areas where we had been writing relatively low volumes of business. These changes have moved us closer to the competition in terms of pricing but not below it."MMA director of underwriting Derek Plummer hit back at allegations of leading the market down by revealing the insurer was prepared to lose market share to maintain profitability.MMA is thought to have dropped its average premium by up to 5% over the last two months but Plummer insisted the company was writing for profit. He said: "The current position is that we now see real pressure on rates and we are not prepared to engage in unprofitable pricing. We do mean this. For example we are forecasting a double digit percentage fall in our motor account for 2005."
MMA's expanded motor offeringMMA is to expand its motor offering within the comprehensive market providing cover for more models and higher value cars in order to counteract the softening market. Underwriting director Derek Plummer said: "We are gradually working our way up the rating scale to group 15 or 16, up to BMWs and Jaguars."We are doing this month on month, gradually introducing a wider range of makes and models into our pricing structure."