The motor insurance market will remain in profit until 2007, according to industry analysis by professional services firm Deloitte.
The optimistic outlook comes after the second successive profitable year for the industry. Although claims and expenses marginally exceeded premiums in 2002 this was offset by investment income.
Deloitte calculates the sector produced an estimated insurance profit of £350m on net premiums of £8bn.
The profit was a result of the premium increases applied in 2001.
Deloitte partner Harold Clarke said: "The UK motor insurance industry has exited the roller-coaster market of the past 20 years and entered a period of cruise control.
"A significant number of insurers can expect to enjoy profitability for the next five years at least. However, claims inflation continues to exceed premiums inflation and this trend needs to be broken, or there will be a gradual decline in the profitability of the market."
Deloitte also predicts that the forthcoming regulatory requirements for intermediaries will lead to broker consolidation, as some find themselves no longer profitable.
