LV= brokered motor GWP drops as rates fall

LV=’s general insurance gross written premium (GWP) dropped 1.7% in the first nine months of 2013 because of cutbacks to brokered motor business.

Group chief executive Mike Rogers blamed personal motor rate cuts for the GWP decline, but added that he expected rates to recover by the end of next year.

GWP drop

In a trading statement, the insurer said general insurance GWP fell to £1.13bn in the first nine months of 2013 from £1.15bn in the same period last year.

Overall brokered GWP fell 4.2% to £483m (first nine months of 2012: £504m), while direct business increased slightly to £644m (first nine months of 2012: £643m).

Overall motor GWP fell 6.3% to £835m (first nine months of 2012: £891m), despite growth elsewhere in LV=’s portfolio.

Home GWP increased 8.3% to £117m (first nine months of 2012: £108m), while other business GWP increased by 18.2% to £175m (first nine months of 2012: £148m).

Despite the GWP dip, the number of motor in-force policies increased to 3.1 million from three million and total in-force policy numbers rose 7% to 4.4 million from 4.1 million.

Rate recovery

Rogers said: “Despite tough market conditions across the board, sales have been resilient in the first nine months of 2013.

“In general insurance, our strategy of offering competitively priced products underpinned by excellent customer service is working well and we are seeing renewal rates of 80% on key products.

“Although GWP is slightly lower than this time last year, this reflects a fall in motor premium rates rather than in our motor customer base where we have increased our in-force policies by over 200,000. We have continued to grow our SME and home businesses both in relation to GWP and customer numbers.”

He added: “Looking towards year-end and 2014 we expect rates in motor insurance to recover as we believe the reduction in premiums as a result of the Laspo legislation may have been over-anticipated by certain segments of the market. Subject to claims experience in the final quarter we also expect to report an improved underwriting result this year compared with 2012.”