Most underwriters said property, motor and liability markets would harden in next three months, according to a survey
Some 92% of underwriters expect motor insurance premiums for UK companies to increase in the first quarter of 2009, according to a quarterly survey by Aon.
The survey tracked UK underwriters’ premium predictions for property, liability and motor fleet insurance.
According to the research 74% of underwriters believed property rates would increase in the next three months and 69% expected liability premiums to also rise.
‘Insurers are looking to make up for three to four years of offering competitive rates. Now, poor profits, the rising cost of claims and the challenges of the tough economic environment are driving the expectationof rate increases in 2009,’ said Aon in a statement.
“We are hearing very strong messages from insurers about rates rising but these have not yet manifested themselves into actual increases.
Steve Redgwell, Aon
Steve Redgwell, broking director for Aon, said: ‘We are hearing very strong messages from insurers about rates rising but these have not yet manifested themselves into actual increases.’
He added: ‘However, UK companies must be aware of and prepare for the imminent shift in insurance market conditions that could affect their cover and premiums. For example, we are already seeing challenges in capacity available for certain industries, such as the food sector. Also, insurers are placing greater attention over the commitment and focus of businesses on the management of risk where the trend is that of a high volume of losses, such as in the retail sector.’
‘But underwriters are still hungry for new business and it is possible for companies to achieve highly competitive rates – as long as businesses can evidence that they are committed to and have a culture of good risk management. Insurance brokers must continue to work with their clients and insurers to provide the quality of information they need to obtain broad and competitively priced cover for UK companies. This especially rings true as, when we look further ahead, 92% of underwriters expect liability rates to rise over the next six months so good insurer relationships are crucial in helping keep rates down at a time when companies need to control costs.’
The insurers surveyed underwrote £23.5 billion worth of premiums for UK companies in 2008.
Underwriters' comments from the survey
By the middle of 2009 we would expect the market to have hardened significantly. This will present challenges. Companies will be looking to minimise expenditure due to their own financial pressures, at the same time insurers will be forced to increase rates.
We are expecting a rise in claims together with the economic downturn to contribute to the hardening of the insurance market in 2009.
Well managed risks will remain competitively priced but there will be premium increases of 10%+ for poor and unmanaged risks.