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Performance Ratio Benchmarking: Motor 2011
Datamonitor, January 2012, Pages: 17
The motor insurance market faced continued pressure from bodily injury claims in 2010 as well as a drive for efficient operating costs. This brief analyzes the performance ratios of the UK private and commercial motor market, at both an industry level and across the top 10 respective insurers. The expense ratio is examined by its component parts: commission, admin and other acquisition expenses.
- 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 2010.
- In personal motor insurance, LV= reported the lowest combined operating ratio in 2010, with 100.4%. While still short of breaking even, this outmatched the average market COR by 14.4 percentage points.
- While the commission expense ratio improved, it continued to account for the largest share of underwriting expenses, making up 41.6% of the total expense figure. The modest improvement seen can be attributed to a continuing soft commercial motor market.
- RSA reported the best expenses ratio by a significant margin, from among the top 10 insurers, in 2010 but also accounted for one of the worst loss ratios. Its expense ratio was 10.8%, in comparison to the market average of 27.1% and an average from the top 5 insurers of 21.9%.
Reasons to buy:
- Which of your market’s top 10 insurers performed best in 2010?
- How has the market as a whole fared on expense and loss ratios in 2010?
- How do your performance ratios compare to the market average and the top 10 insurers?
UK PRIVATE MOTOR PERFORMANCE RATIOS ANALYSIS
•The underwriting expense ratio improved while claims costs continued to spiral
?The COR improved by 0.8% in
?Commission expenses saw the greatest ratio improvement among underwriting costs
?The market's loss ratio increased as personal injury claims rose in volume
?LV= possesses the lowest COR
?Market leader RBS accounted for the lowest total expense ratio but also the highest COR
?Co-operative posted the highest expense ratio of the top 10 private motor insurers
UK COMMERCIAL MOTOR PERFORMANCE RATIOS ANALYSIS
•The market's COR increased by two percentage points to 110%
?The loss ratio increased as underwriting expenses witnessed a modest improvement
?Commission costs continue to account for the largest share of expenses
?The market leader Aviva posted the best COR from the top 10 insurers
?RSA achieved the strongest expense ratio performance
?Reported year combined ratio
•Ask the analyst
•Table: UK private motor insurance market performance ratios (%), 2006–
•Table: Top 10 private motor insurance groups' performance ratios (%),
•Table: UK commercial motor insurance market performance ratios (%), 2006–
•Table: Top 10 commercial motor insurance groups' performance ratios (%),
•Table: Top 20 UK private motor insurers and total market size by gross written premiums (£000s), 2007–
•Table: Top 20 UK commercial motor insurers and total market size by gross written premiums (£000s), 2007–
•Figure: Improvements were made to all elements of the market's expense ratio in
•Figure: RBS accounted for the strongest expense ratio in the top 10, but also the highest loss ratio
•Figure: Ageas posted the second best COR performance in 2010, with expense and loss ratios below the top 10 average
•Figure: A continuing soft market resulted in commission rates accounting for the largest share of expenses
•Figure: Market leader Aviva posted the lowest COR of the top
•Figure: Of the sixth to 10th placed insurers in 2010, only LV= recorded a lower COR than the top five average
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