MarketResearchReports.Biz
announces addition of new report "UK Commercial Motor Insurance:
Market Dynamics & Opportunities 2017" to its database.
"UK
Commercial Motor Insurance:
Market Dynamics & Opportunities 2017", analyzes the UK
commercial motor insurance market, looking at market size as well as
changes in premiums, claims, road casualties, the motor parc,
regulations, and opportunities. It discusses competitors in the
market, how the market is likely to change due to telematics and
driverless cars, and provides future forecasts of market size up to
2021.
The
commercial motor insurance market grew slightly in 2016. This was a
result of economic growth, which in turn increased business
prosperity and therefore the investment in commercial vehicles to
support business expansion. Despite growth in commercial motor, the
market is heading towards unprofitable territory as it is expected
that rates will begin to harden over the next few years, until
further government reforms are introduced that might lower claims
costs. As reported last year, claims costs fell initially when LASPO
was implemented back in 2013, but the claims environment has now
stabilized. Some insurers continue to report rises as the market has
adjusted to the legislation. The commercial motor parc continued to
increase in 2016, with light goods vehicles and company cars driving
the majority of growth. However, with the UKs vote to leave the EU it
is expected that motor parc growth will slow, as businesses will have
less confidence and money to invest in new commercial vehicles until
the economy begins to recover. While reforms will provide instant
benefits upon implementation, telematics and driverless technology
will help reduce the frequency of claims in the longer term.
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Scope
- Gross written premiums for
the commercial motor insurance market grew by 4.5% to 4.17bn in 2016.
- The claims environment,
alongside personal motor insurance, remains in a state of uncertainty
around the impact of the discount rate reduction to -0.75% and
whiplash claim reforms.
- There are concerns among
industry experts around longer-term market profitability and the
availability of reserves to bolster combined operating ratios,
particularly if the predicted negative impacts of leaving the EU come
to fruition.
Reasons to buy
- Benchmark yourself against
the rest of the market.
- Ensure you remain competitive
as new innovations and insurance models begin to enter the market.
- Be prepared for how
regulation will impact the commercial motor insurance market over the
next few years.
Table Of Contents
1. EXECUTIVE SUMMARY 3
1.1. Future growth continues to be linked to economic prosperity and
the ability to respond to market dynamics 3
1.2. Key findings 3
1.3. Critical success factors 3
2. MARKET DYNAMICS 10
2.1. Introduction 10
2.2. Commercial motor GWP grew slightly in 2016 10
2.2.1. The total motor insurance market grew by 10.3% in 2016 10
2.2.2. The commercial motor insurance market grew to 4.17bn in 2016
12
2.2.3. Lloyds of London accounts for 7.7% of the commercial motor
market 12
2.3. Excluding IPT, commercial motor insurance premiums remained flat
over 2016 12
2.3.1. IPT has been increased to 12% 12
2.3.2. The IPT increase kept premiums in check in 2016 13
2.3.3. Premium rates will have to rise in addition to IPT if the
market is to remain profitable 13
2.4. Claims costs are putting pressure on profitability 14
2.4.1. The discount rate was changed from 2.5% to -0.75% 14
2.4.2. Insurers profits have been hit by the rate change 14
2.4.3. The Ogden rate change cost has impacted profitability 15
2.4.4. The MoJ is consulting on how the Ogden discount rate should be
set going forward 15
2.5. Claims frequency is down but severity is increasing 15
2.5.1. CMCs have consolidated following LASPO 15
2.5.2. The ABI reports that the number of commercial claims notified
remained flat in 2016 16
2.5.3. Personal injury motor claims have risen for the past two years
17
2.5.4. Whiplash claims account for up to 80% of motor personal injury
claims numbers 18
2.5.5. Fraud remains a significant issue 19
2.5.6. Motor personal injury claims remain high, while RTA claims are
in decline 19
2.5.7. Most RTA casualties are car occupants, but these are the least
vulnerable road users 20
2.5.8. The number of RTA casualties continues to fall across all road
user types 20
2.5.9. The number of pedal cyclist casualties has reached a five-year
low 21
2.5.10. Larger commercial vehicles are colliding with pedal cyclists
21
2.6. The UK commercial motor parc continues to grow in a positive
economic outlook 22
2.6.1. The commercial motor parc increased by 3.9% against 2015
figures 22
2.6.2. Company cars and LGVs are the most common commercial vehicle
types 22
2.6.3. The number of newly licensed commercial vehicles rose slightly
in 2016 25
2.6.4. The majority of commercial vehicles continue to be licensed in
the South East 26
2.6.5. Road usage continues to rise as a result of a growing motor
parc and cheaper fuel 27
3. COMPETITOR DYNAMICS 30
3.1. RSA, Aviva, and Allianz lead the commercial motor market 30
3.1.1. RSA has been the top commercial motor insurer for the past
three years 31
3.1.2. Aviva is the second-largest commercial motor insurer 31
3.1.3. Allianz and LV= are combining to form a joint venture 32
3.1.4. NFU Mutual specializes in insuring agricultural and specialist
commercial vehicles 32
3.1.5. AXAs commercial business is growing through its mid-market
proposition 33
3.1.6. Other developments from commercial motor insurers 33
4. THE MARKET GOING FORWARD 35
4.1. The Civil Liability Bill aims to reform personal injury motor
claims 35
4.1.1. The benefits of LASPO did not fully materialize 35
4.1.2. Initial proposals aimed to increase the small claims track
limit and remove general damages for minor soft tissue injuries 35
4.1.3. The MoJ has published its first response to the consultation
on reforms 35
4.1.4. The Prisons and Courts Bill was scrapped due to the snap
general election 36
4.1.5. The Queens Speech following the election introduced a Civil
Liability Bill 36
4.1.6. There has been a split reaction to the Civil Liability Bill 36
4.1.7. Estimates suggest the Civil Liability Bill will save customers
35 on motor insurance premiums 37
4.1.8. The small claims limit will increase to 5,000 for RTA claims
37
4.1.9. A tariff system is being introduced for RTA-related soft
tissue injury claims 38
4.1.10. Claims will not be settled without a MedCo medical evidence
report 39
4.2. Proposed reforms will impact motor insurance profitability 40
4.2.1. Tariffs and the small claims track limit increase will have a
significant impact 40
4.2.2. The increase in the small claims track could affect 70-80% of
claims 41
4.2.3. Legal costs could be reduced by up to 50% 42
4.2.4. The introduction of tariffs could reduce whiplash claims costs
by 1bn 42
4.2.5. The success of reforms will be dependent on how and when the
market responds 42
4.3. The size of the commercial motor market will depend on rates 42
4.3.1. The future of the commercial motor insurance market is reliant
upon three main factors 42
4.3.2. The dynamics of growth for the commercial motor insurance
market will shift in the next few years 43
4.3.3. The economy will continue to dictate growth of the commercial
motor parc 44
4.3.4. Rates may rise in response to claims inflation, but may fall
due to new government reforms 45
4.3.5. IPT rises continue to drive costs for insurers and customers
alike 46
4.4. Vehicle technology will reduce claims costs in the long term 46
4.4.1. Usage of telematics and safety features are increasing in the
commercial motor market 46
4.4.2. 65% of businesses are using telematics in their vehicles 47
4.4.3. Some aspects of vehicle technology usage will have longer-term
benefits 47
4.4.4. The government is supporting the development of driverless
technology 48
4.4.5. Motorists with driverless cars will be required to have dual
insurance policies 48
4.4.6. Autonomous car manufacturers are entering the insurance market
for driverless cars 49
4.4.7. Motor insurers are looking to partner with driverless car
manufacturers 49
4.4.8. More than half of new UK cars are now sold with autonomous
features 50
4.4.9. The need for personal car insurance could diminish, causing
the commercial market to grow 51
4.4.10. Driverless technology is being developed to create autonomous
delivery services 51
4.4.11. Improved vehicle technologies have business benefits outside
of insurance 52
4.5. Implications of other legislation under consideration 52
4.5.1. Implications of the Vnuk ruling 52
4.5.2. Environmental improvements promised through Clean Air Strategy
53
5. APPENDIX 54
5.1. Abbreviations and acronyms 54
5.2. Bibliography 54
5.3. Further reading 59
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