UK property and casualty insurers will continue to suffer poor profits in the short term because of inadequate pricing, according to rating agency Moody's.

Simon Harris, a senior analyst at the agency, forecasts a poor outlook for the market unless major players focus on increasing their profitability rather than market share.

He warns that although premium rates are beginning to rise in most insurance classes, too many insurers are chasing volume.

A raft of legal and regulatory reforms such as the Ogden tables, Law Commission reforms and proposals to tax P&C insurers loss reserves are also exerting negative pressures on the industry's credit rating.

However, he adds that in terms of capitalisation, the market remains strong and its prospects are stable for the medium term.

“In Moody's view, rates will have to continue to improve for some time before real profitability returns,” said Harris.