Pricing should reflect economic indicators and the link between recession and rises in property crime
Insurers can expect to see their profitability come under further pressure as the effect of the recession hits households and businesses around the UK, warned the consultancy EMB.
EMB Partner, Peter Lee, said;: ‘Insurers need to ensure their price assumptions reflect the unfolding situation. Unfortunately, research has overwhelmingly shown a correlation between poor economic conditions, unemployment and crime levels, particularly crimes against property.’
According to the consultant, this month Tesco apprehended more than 43,000 shoplifters in the first half of 2008, an increase of 36% over the same period in 2007. In Ireland the Central Statistics Office has reported increases in retail theft and burglary of 9 % and 7 % respectively during 2008. Arson is also up 24 % this year, according to official statistics.
Overall, household claims are over 40% higher than they were two years ago before the downturn started.
Lee said: ‘Insurers need to ensure their postcode analyses are up-to-date.’
Andrew Torrance, chief executive of Allianz UK, said he had seen a 60 % increase in questionable claims for motor and commercial property over the last year.
