The UK is set for solid and balanced economic growth into 2005, but it may not be enough to outstrip the growth of capacity supply in the insurance industry, said Aon and the Royal Bank of Scotland (RBS).
Aon commercial division chief executive David Martin, said: “Last year, most insurers around the world and in the UK posted some of their best results for the last decade, with most achieving a combined ratio of claims and expenses to premium collected of under 100%.
“There is a cloud on the horizon however which is that the strong economic growth may not be enough to outstrip the growing insurance capacity currently available.
“This is already having the effect of driving down insurance premium rates at a time when insurers are still rebuilding their balance sheets and dealing with legacy issues which will increase the fragility of the market should the trend of losses turn upwards.”
The two companies also said:
· The softening insurance market is having a greater impact, in terms of lower, premiums, for larger businesses. Eventually though this impact is likely to be felt by smaller organisations,
· Business interruption has seen the greatest reduction in premium pricing, and
· Employers' liability is still suffering from rapid claims inflation (from 10% to 20%) which is pushing up insurance prices, though increased insurer competition, particularly for the very well managed risks, may begin to dampen further rises.
