LONDON, 19 September 2016 - Analysis of Prudential Regulation Authority (PRA) registered UK motor insurers’ operating results in 2015 by Willis Towers Watson has highlighted the need for future strategies to address a changing claims environment and the impact of technology on existing business models.
A key issue put forward in this latest annual UK Motor Insurance Industry Report is that whilst trends in the number of claims are largely benign, the cost of settling damage repair claims continues to rise as more vehicles are equipped with more expensive and complex technologies. Low speed incidents that might previously have resulted in only a dented bumper may now lead to costly repairs of equipment such as proximity sensors and reversing cameras. Such inflationary pressures contributed to the net underwriting loss ratio (cost of claims as a percentage of earned premium income) in the private market increasing significantly from 82% in 2014 to 84.9% in 2015.
Stephen Jones, UK Head of P&C Pricing at Willis Towers Watson, commented: “Claims analytics is an area in which we think there’s considerable headroom for insurers to improve not just their claims performance, but also to feed insight into other aspects of their business, including pricing, underwriting and customer relationship management.”
Similarly, developments such as the use of ‘Big Data’ analytics to maximise the value of customer and claims data, the maturing telematics market, the complex business and legal implications of emerging vehicle technologies, and the specialist insurance needs of a rapidly evolving sharing economy will all need to be reflected in how motor insurers and intermediaries approach the market, the report suggests.
Stephen Jones said: “Companies will need to be on the front foot when dealing with further changes and opportunities that technology will inevitably bring to business strategies and operations. While a growing number of insurers are repositioning themselves by partnering their experience and long-term mindset with the creativity and agility of technology companies, the industry as a whole has some way to go before it can be said to have fully embraced this collaborative new economy.”
Notes to Editors
This report was current as of September 2016. We have used reasonable endeavours to ensure that the information in the report is correct but we have sourced information from various third parties that we have not always been able to verify.
About Willis Towers Watson
Willis Towers Watson (NASDAQ: WLTW) is a leading global advisory, broking and solutions company that helps clients around the world turn risk into a path for growth. With roots dating to 1828, Willis Towers Watson has 39,000 employees in more than 120 countries. We design and deliver solutions that manage risk, optimize benefits, cultivate talent, and expand the power of capital to protect and strengthen institutions and individuals. Our unique perspective allows us to see the critical intersections between talent, assets and ideas — the dynamic formula that drives business performance. Together, we unlock potential.