Performance Ratio Benchmarking in UK Motor Insurance 2009

Introduction

This brief analyzes the loss, expense and combined ratios of the UK private and commercial motor markets at an industry level as well as the performance ratios for the top 10 private and commercial motor insurers respectively. The expense ratio is examined and broken down by its component parts: commission, administrative and other acquisition expenses.

Scope

*Key performance measures for the top 10 UK private and commercial motor insurers in 2008.

*Insight into the underwriting profitability of the top 10 UK private and commercial motor insurers.

Highlights

The average fee charged by an aggregator for a motor sale has increased over the last 12 months as has aggregators' share of new business sales. These two factors will place an upward pressure on commission ratios.

It is notable that the commission ratio has been increasing since 2006, from 8.6% to 11.2% in 2008 which is due to the soft market conditions.

Reasons to Purchase

*Gain insight into the reasons for different cost structures held by insurers.

*Benchmark your performance ratios against those of major competitors.

*Identify which motor insurers became more or less profitable in 2008.


Report Highlights

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DATAMONITOR VIEW 1
CATALYST 1
SUMMARY 1
UK PRIVATE MOTOR PERFORMANCE RATIOS ANALYSIS 2
Aggregators are pushing up commissions 2
Aggregators are driving up commission costs 2
The market leader RBS possesses one of the lowest commission expense ratios 3
Liverpool Victoria is running a high COR as it builds out the business 3
UK COMMERCIAL MOTOR PERFORMANCE RATIOS ANALYSIS 7
Softening market condition drove up UK commercial motor market's commission ratio 7
Fees paid to brokers are pushing up commission ratio 7
Aviva incurred a high expense ratio in 2008 7
APPENDIX 11
Definitions 11
Acquisition cost 11
Administrative expenses 11
Reported year combined ratio 11
Reserve development 11
Further reading 11
Ask the analyst 11
Datamonitor consulting 12
Disclaimer 12
List of Tables
Table 1: Top 10 private motor insurance groups' performance ratios, 2008 (%) 6
Table 2: Top 10 commercial motor insurers' performance ratios, 2008 (%) 10
List of Figures
Figure 1: Fees paid to aggregators have pushed up commission costs 3
Figure 2: RBS's largely direct model means it runs a low commission ratio 4
Figure 4: Liverpool Victoria is running a high expense ratio as it builds out the business 5
Figure 4: The soft market has driven up the commission ratio 7
Figure 5: Aviva recorded a higher than average expense ratio in 2008 8
Figure 6: Tradex and QBE recorded the lowest CORs, post reserve releases 9

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List of Tables
Table 1: Top 10 private motor insurance groups' performance ratios, 2008 (%) 6
Table 2: Top 10 commercial motor insurers' performance ratios, 2008 (%) 10

List of Figures
Figure 1: Fees paid to aggregators have pushed up commission costs 3
Figure 2: RBS's largely direct model means it runs a low commission ratio 4
Figure 4: Liverpool Victoria is running a high expense ratio as it builds out the business 5
Figure 4: The soft market has driven up the commission ratio 7
Figure 5: Aviva recorded a higher than average expense ratio in 2008 8
Figure 6: Tradex and QBE recorded the lowest CORs, post reserve releases 9
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