Esure GWP drops 4% as company exercises underwriting discipline

Esure reported gross written premium (GWP) of £410m in the first nine months of 2014, down 4% on the £427m the company write in the same period last year.

Within this, motor GWP fell by 4.5% to £343.9m and home GWP fell 1.3%.

The company attributed the fall to underwriting discipline in a competitive market in both motor and home business.

Chief executive Stuart Vann also warned that there are signs of inflation in small bodily injury claims, but predicted Esure would nonetheless report a combined operating ratio (COR) of close to 92% for the full 2014 year.  

In-force policies

The GWP drop came despite a 2.5 increase in in-force policies to 1.95 million (first nine months of 2013: 1.91 million.

Ancillary income, which includes add-ons, instalment income, policy administration fees and legal panel membership fees, fell slightly to £79m from £79.3m.

But ancillary income excluding claims income increased 2.8% to £74.7m (first nine months of 2013 £72.7m).

Underwriting discipline

Esure chief executive Stuart Vann said: “We have seen some signs of rate stabilisation in the UK motor market but it is too early to say if this represents a turn in the motor rating cycle or is a consequence of rating seasonality.

“We have remained disciplined in our approach, while continuing to position the business for future growth.

“The reduction in our gross written premiums is consistent with our guidance, as we continue to focus on underwriting discipline against a backdrop of a competitive rating environment in both motor and home.“

Vann added that in recent months Esure has put through a number of targeted rate increases in motor, which has resulted in a small reduction in in-force policies in the third quarter compared with  the second quarter.

Bodily injury claims

Vann also warned that despite the introduction the Legal Aid, Sentencing ad Punishment of Offenders Act, there were signs that claims inflation was starting to re-emerge.

The company said that data from the Ministory of Justice Claims Portal showed that there was an increase in small bodily injury claims in Q3, with the number of claims notification forms up 15% in August and 20% in September.

The company said: “The group will monitor these developments carefully to see if they turn into longer term trends.”

Vann added that Esure continues to set claims reserves prudently and as a result now expects the full-year combined operating ratio to “tick up towards 92%, assuming normal weater for the remainder of the year.”