Insurer aims to build on 2010 improvements to return to growth
Zurich is looking to increase UK motor rates by between 10% and 15% this year to combat rising bodily injury claims.
Commenting on Zurich UK’s full-year 2010 results, chief executive Stephen Lewis said it would build on the average increases of 14% pushed through last year. “The industry is going to be looking for something in the range of 10% to 15%, and I don’t think we will be too dissimilar if you look at what is still a pretty severe bodily injury claims inflationary trend,” he said. “The industry is going to need 10% to 15% to return it to break-even.”
Zurich’s UK general insurance operating profit fell 13% to $200m (£124.8m) in the full-year 2010, from $229m in 2009. Gross written premium dropped 12% ($400m) to $2.8bn, from $3.2bn in 2009.
Lewis attributed the decline to losses – and the resulting remedial action – in the personal lines motor book. In addition to the rate increases made in 2010, which reached 20% on some accounts, the company also cut unprofitable business.
The moves to improve motor profitability helped Zurich to an underwriting profit of $9m in 2010, compared with an underwriting loss of $2m in 2009, while combined ratio improved to 99.7% from 100.1%.
In commercial lines, Zurich’s premium increased just short of 1%. This included rate increases of 2%, which Lewis said were “hard to come by”. He expects rate increases of less than 5% in commercial lines industry-wide throughout 2011, but believes prices should be going up by more than 5%.
“If you look at my fellow chief executives, we are all talking the right game, but it is not really coming through in the context of sufficient rates to offset claims inflation against the backdrop of low interest rates. Clearly margins are under pressure.”
Lewis believes the work done in the past year will soon start bearing fruit. “In the first half, we will continue to fix our capability and in the second reposition ourselves to begin growing,” he said.