Personal Lines Rates Are Higher in the UK, Says Bloomberg Intelligence

This is an interesting note from Bloomberg, which suggests that some premium rate rises in the UK and Ireland are significantly higher than mainland Europe. Here’s the word;

Price increases for personal lines in the UK and Ireland far exceed those in other European insurance markets, which, according to a new report by Bloomberg Intelligence (BI), may indicate that the UK market is in crisis and facing much greater dislocation than other markets. Axa raised personal lines pricing in the UK and Ireland by 51.7% in Q1 to try to improve the performance of its motor insurance book, notes BI, while the quarter also saw Allianz increase UK pricing by 35.3%.

Charles Graham, BI Senior Insurance Industry Analyst, said: “Personal-lines pricing is rising faster than commercial lines, based on Axa figures, as insurers play catch up with the cumulative effects of inflation. Yet Europe-wide price increases have diverged. Allianz raised rates in the UK by 18.4% through 2023 before boosting Q1 pricing by 35.3%. Axa’s UK and Ireland prices jumped 31.5% for retail lines in 2023, then it pushed them up a whopping 51.7% in 1Q. The magnitude of such rate increases dwarfs the rises in Germany, France, Italy and Spain.”

Price Hikes Have Helped Keep Allianz UK Business Profitable

Allianz’s 35.3% Q1 UK price jump — building on an average 18.4% price gain through 2023 – has helped keep its underwriting profitable there, according to BI. Allianz had a 95.5% combined ratio in Q1, higher than Germany (93%) or France (90.3%). Since the beginning of 2022, the combined ratio has averaged 97.4%, with France at 94.8% and Germany 91.9%. It has only exceeded 100% in one quarter.

Yet rate rises in Germany and France have, adds BI, been much lower than the UK despite similar inflationary pressures. German rates increased 6.6% in 2023 and 7.6% in 1Q. Prices in France increased 8.2% in 2023 and 9.6% in 1Q. Allianz doubled the size of its UK business with the acquisition of 100% of Liverpool Victoria (LV=) and L&G’s general insurance business in 2020. Through Pet Plan, it’s also the country’s leading pet insurer.

Charles Graham added: “The challenge for European insurers remains how to keep pricing ahead of inflation. While commercial policies may include automatic indexation on long-term contracts to reflect inflation trends, the treatment of inflation for personal-lines pricing and particularly for motor varies by geographic region and is often dependent on individual insurers adjusting pricing in competitive markets.”