UK chief exec predicts double digit increases in motor and household across the market
RSA UK chief executive Adrian Brown has predicted continued double-digit rate increases in motor, and household increases towards double digits, in 2011.
Brown’s comments followed the release of RSA's 2010 results, which showed a “disappointing” 102.2% COR and £95m underwriting loss (2009: £75m profit) in the UK.
He defended the insurer’s performance and said he was “absolutely delighted” with its 11% growth in premiums to £2.9bn.
Brown added that RSA’s group result – an overall COR of 96.4% - demonstrated the insurer’s “ability to ride a cycle out”.
RSA had to boost its motor reserves by £25m - £22m of that in commercial motor – because of rising bodily injury claims.
Brown predicted the number of claimants per bodily injury claim would level out this year, but that underlying severity and frequency would continue to rise.
He said: “It will be madness if we don’t get double digit rate rises right through 2011. But I’ve been in this business long enough not to be amazed by anything.”
Asked if there would be any further rate releases, he said: “I believe we’re right on top of bodily injury, and we will continue to monitor it really, really closely.”
Brown defended the insurer’s performance on household, saying that over the past ten years, it had got its pricing right. However, he said this was not the case across the market: “The market is underpriced by three, four, five per cent and may be this sort of event will cause rates to rise closer to double digit rather than low single digit. The weather event can be used as an excuse, but really that’s about having the right long term pricing strategy.”
He said he expected RSA’s household rate rises to “nudge up” from the 2010 level of 5%.