Datamonitor forecasts GWP of £29.2bn in 2014, up from £25.7bn this year
A gradually improving economy, coupled with sharp rate hikes, helped the UK personal lines market to increase gross written premium (GWP) modestly in 2010 after two years of decline, according to a study by research and analysis firm Datamonitor. There is also further growth predicted in future years.
Datamonitor forecasts that UK personal lines GWP will increase by 0.5% to £25.7bn in 2010 from £25.6bn in 2009, having fallen by around 2.6% in both 2008 and 2009. While the 2010 level will still be below 2008’s £26.6bn, Datamonitor expects greater growth, forecasting GWP of £29.2bn in 2014.
The company expects to see the strongest growth in 2011 and 2012, with growth continuing, though at a decreased rate, in 2013 and 2014. The deceleration in the latter two years will be driven by an expected slowdown in private motor and, to a lesser extent, in personal pecuniary loss insurance.
“We have seen overall growth in the economy of between 0.6% and 0.8% over the past year,” said Datamonitor financial services analyst Stephen Ko. “Based on that premise, we think retail sales will go up, unemployment will go down slightly, and the market as a whole will improve, which will have a knock-on effect on personal general insurance.”
In addition, both household and private motor insurance have seen “dramatic” rate increases, according to Ko, which has helped boost GWP levels. Motor rates in particular are increasing sharply in response to rising bodily injury claims. “Private motor is seeing double-digit rate increases every quarter: 11%, 12% and 13%,” said Ko.
Ko added that the increase in insurance GWP bodes well for the wider economy.
“Because the insurance industry is having more of an effect on the economy, we expect that growth in this area will have a knock-on effect in other areas as well,” he said.