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Insurers speeding away from non-comprehensive insurance
Car insurers are responding to worsening losses by making significant rate corrections and reducing capacity for the riskier non-comprehensive market finds Datamonitor.
Research by the independent market analyst has revealed that despite moderate growth in comprehensive insurance, the non comprehensive market shrunk by a whopping 10% last year impacting the whole of the private car insurance industry.
In fact non comprehensive insurance now accounts for just 8.2% of all private motor policies, down from 16.3% ten years ago.
Robert Mattai analyst at Datamonitor said: “Non comprehensive car insurance is becoming rarer mainly because private car insurers are now moving away from this line of business due to the huge underwriting losses.
“The losses are far greater than in the comprehensive sector because customers who buy non comprehensive cover are usually young and inexperienced and so have a higher likelihood of claim.”
As a result, non comprehensive insurance is becoming more and more expensive, with the average price for cover now £1,196 compared to £968 for comprehensive.
Mr Mattai added: “Although the private car insurance market declined last year to be worth £9.2bn in Gross Written Premium (GWP), a hardening of premiums will help to lead the market back into growth, which will hit cash strapped drivers.
“We’re already seeing the cost of premiums increasing across the board, and rate increases are definitely carrying. Going forward, it will be the non-comprehensive premiums which will see the biggest increase in terms of cost
“In fact by 2014 the total market will be worth £10.7bn – an increase of more than £1bn over four years.”
