Many established insurers and brokers will refuse to let their rates soften
Personal lines insurers and brokers are certainly set for interesting times if predictions from insurance industry leaders are anything to go by. Some have even gone as far as to say that the sector in 2002 will be "challenging and dynamic".
For a start, long-awaited premium increases are expected across the sector. According to the British Insurance Premium Index from the AA, rises in the household market are expected to be around the 7% mark and insurers are preparing for a 6% rise in the motor market.
This news comes as the sector faces an influx of start-ups such as esure and bluesure. There were fears that these would lead the market into a price war. However, many of the more established insurers and brokers say they are going to leave them to slog it out and refuse to allow their rates to soften under pressure from the start-ups.
New entrants are coming in many forms it seems. This month alone has brought news of Sainsbury's Bank's own-branded motor policy which is targeted at more than 11 million shoppers. And Lombard Direct plans to expand its product range to include direct home and motor insurance.
There are challenges beyond motor and household insurance in personal lines too, with health insurers receiving a revised 2002 outlook of negative from stable, from Standard & Poor's. This is due to mounting negative pressures such as rising medical costs and the current weak economy.
Travel insurance, too, will be attempting to recover from the double whammy of last year's foot and mouth outbreak and the World Trade Centre tragedy.
As for personal lines brokers, leading players say that as long as they embrace the opportunities presented by cross-selling and new technology, the future for many should be rosy.