United Kingdom’s recovery in GDP growth has supported the demand for non-life Insurance products in the market. The major factors affecting the non-life insurance market in UK are the increase in consumer spending limit, the recent changes in the regulatory structure and new insurance regulations implemented by the government. The year 2017 has introduces many changes in the non-life insurance market in UK. The insurance premium tax (IPT) in UK was raised on motor, pet insurance, contents insurance, mobile, buildings and private medical insurance. The personal injury claims rate used to calculate the final compensation amount was reduced by the UK’s Ministry of Justice. It was estimated that by the year 2020, fully automated driverless cars would become a reality on United Kingdom roads.
The non-Life insurance investments in the United Kingdom include government securities, corporate bonds, investment funds, cash in bank or hand, other investments and total investment income. The evolution in the non-life insurance industry dynamics has made insurers to focus on cost-control measures, to enhance professional standards for insurance advisers and brokers, to regulate commissions earned and fees paid by financial professionals which are all likely to have a positive effect over the coming years. The major distributors in the non-life insurance market are direct marketing and bank assurance.
According to the research report “Non-Life Insurance in the UK, Key Trends and Opportunities to 2020”, the non-life insurance market mainly comprises of property insurance, fire and allied perils insurance, engineering insurance, motor insurance includes motor hull insurance, motor third party insurance and general third party insurance and marine, aviation and transit insurance consists marine insurance, marine hull insurance, marine third party insurance and aviation insurance and transit insurance. The non-life insurance market is primarily split into motor insurance, health insurance, travel insurance, home insurance and marine insurance.
The major Non- life insurance companies are in collaboration with their counterparties such as Allianz has a joint venture in the UK general insurance market, Axis Capital on its recommended cash acquisition of Novae Group, Lark Group on its merger with Aston Scott, Ryan Specialty Group on the sale of Ryan Direct Group to private equity firms HPS Investment Partners and Madison Dearborn Partners, Primary Group on the sale of UK General to JC Flowers & Co, AXA on the sale of its UK P&C commercial broker Bluefin to Marsh, the shareholders of Lonmar Global Risks on the sale of a majority stake to Global Risk Partners, Congregational & General Charitable Trust on the sale of Congregational & General Insurance to Inter Hannover, Jelf Group plc on the recommended cash acquisition by Marsh, Wesleyan Group on its acquisition of DPAS, Marsh on the acquisition of SME Insurance Services, a specialist SME commercial insurance broker, the shareholders of RFIB Holdings Limited on the sale of a majority stake to Calera Capital, Direct Line Group on the sale of TRACKER to Lysanda, Wesleyan Assurance Society on its acquisition of Practice Plan Group, the management team and minority shareholders in Lark Group on the acquisition from Groupama, Insurance Australia Group on the sale of UK specialist home insurance broker, Insurance Dialogue Limited, Europ Assistance on the sale of its UK insurance and assistance business to management, Groupama on the sale of its UK healthcare insurance business to Simplyhealth, Brit on its sale to Apollo and CVC, Standard Life on the sale of Standard Life Healthcare to Discovery / PruHealth, Brit on its redomiciliation to the Netherlands, Liverpool Victoria on its sale of Hero Insurance Services to Capita, Insurance Australia Group on the sale of its UK mass market distribution businesses to Swinton / management, Liverpool Victoria on its recommended cash offer for Highway Insurance Group Plc, Cerberus’s Investment Committee on GMAC’s acquisition of Provident Insurance, Liverpool Victoria on its acquisition of Britannia Rescue from the Civil Service Motoring Association, Brit on the sale of its majority stake in RI3K, abc insurance on its sale to Liverpool Victoria, management buy-in and new investment of $900m, Misys on the sale of its general insurance software business to Montagu Private Equity, Travelers on the sale of Cassidy Davis to Jubilee Managing Agency, LRA and BAIC on the sale of Airclaims to an MBO team backed by Lloyds Development Capital, Prudential on the establishment of PruHealth, Euclidian on the management buy-out and capital raising sale of pipeline to Berkshire Hathaway, PRI Group plc on the takeover by Brit Insurance, Royal & SunAlliance on the sale of its Healthcare & Assistance business to an MBO/MBI team backed by Barclays Private Equity, CGNU on the sale of Sabre Insurance Company Limited to BDML Limited, , Churchill Insurance on its acquisition of the UK personal and general insurance business from Prudential, QBE on the sale of Iron Trades Healthcare to Groupama, Skandia on the merger of its P&C operations with those of Storebrand to form “if”, AXA on its acquisition of Guardian Royal Exchange.
Non-life insurance market in UK has exhibited growth with the increase in the level of reinsurance. It was observed that the influence of reinsurance and other financial variables in non-life insurance has impacted the growth of consumers across insurance business. Reinsurance is an important strategic function in insurance market which impacts the competitive insurance market. Leverage is another important factor affecting the product-market share at the aggregate business level of the insurance firm.
UK’s non-life insurance segment is the fourth-largest in the world. The increase in the non-life insurance market is partly due to country’s infrastructure development, construction activities, rising car sales, and growing exports. The heavy flood loss in the recent years has recorded an increase in purchase of property insurance products that supported the growth of property insurances. The non-life insurance market in UK is expected to grow at a slow rate over the coming years. The challenge faced by the non-life insurance sector is particularly the ongoing low interest rate. The urbanization and increase in the spending limit will surely affect the growth of the non-life insurance market in UK along with many opportunities.
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Ankur Gupta, Head Marketing & Communications
ankur [@] kenresearch.com
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