July 16, 2009

Defaqto’s newly published report  Motor Insurance 2009: Another Bumpy Ride’ predicts another bumpy ride for motor insurers in 2009.

Whatever else it may portend, the fact-finding firm warns motor underwriters, that faint light ahead does not indicate the end of the tunnel.

Despite evidence that rates have moved upwards, there will be no underwriting profits from UK motor business in 2009, Defaqto bluntly states.

Defaqto ‚ whose name, fact fans, is a corruption of a Latin term de facto meaning roughly  in fact’ or  actually’ (legalistically opposed to de jure meaning  by right’ or literally  of law’)‚ believes the 8.7% rise in average premiums falls pitifully short of the 20% rise required to restore motor underwriting to profitability.

Mike Powell, Principal Consultant for General Insurance, has some advice for motor insurers: “Motor insurers are going to need to think carefully about choosing to write for profit or market share,” he claims. “They are not going to be able to do both.

“Even in the commercial motor market,” he continues, “where there has been consistent profitability for the past few years, profitability is on a knife edge.”

A bumpy ride on a knife edge certainly doesn’t sound good.


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