Only half of UK underwriters predict an increase in premium, says global broker
Second quarter insurance renewals will yield flat or even cheaper premiums. That is the prediction of a global broker.
UK companies renewing insurance in the second quarter could be paying equal or even less premium with just 50% of underwriters predicting an increase in property rates, according to Aon.
This is a dramatic decrease from Q1 when 89% of insurers expected premiums to rise for this core cover. Underwriters’ views have changed as we continue in this economic downturn but a drive for profits could tip the balance at any point.
Aon’s research also showed that only 40% of casualty/liability underwriters believe rates will increase in Q2 compared to 88% in January for the same quarter, while 100% believe motor fleet insurance will remain stable compared to 90% predicting an increase at the start of 2009.
The stagnant insurance market and the need for UK business to keep down costs has led to competition and hence the turnaround in insurers’ opinions. However, insurers will be looking to raise premiums – especially for companies with weaker risk management – as a result of:
• the upward trend in claims during a recession;
• businesses shrinking and in turn so are premium volumes;
• insurers’ reduced investment income as claims costs increase.
Steve Redgwell, head of broking for Aon’s mid to large sized companies said: “These results reflect the great uncertainty that exists in the world at the moment, with a marked change in the expectation of when underwriters feel we will see a shift in rates. It highlights that we are on a knife edge that could tip at any time. However uncertainty is common at the bottom of a competitive market and could remain for sometime. The need to maintain strong relationships with insurers and supply quality information about the business’s approach to risk management is crucial.”