UK Commercial Motor Insurance: Market Dynamics & Opportunities 2017

Powered by

All the vital news, analysis, and commentary curated by our industry experts.

"UK Commercial Motor Insurance: Market Dynamics & Opportunities 2017", analyzes the UK commercial motor insurance market, looking at market size as well as changes in premiums, claims, road casualties, the motor parc, regulations, and opportunities. It discusses competitors in the market, how the market is likely to change due to telematics and driverless cars, and provides future forecasts of market size up to 2021.

The commercial motor insurance market grew slightly in 2016. This was a result of economic growth, which in turn increased business prosperity and therefore the investment in commercial vehicles to support business expansion. Despite growth in commercial motor, the market is heading towards unprofitable territory as it is expected that rates will begin to harden over the next few years, until further government reforms are introduced that might lower claims costs. As reported last year, claims costs fell initially when LASPO was implemented back in 2013, but the claims environment has now stabilized. Some insurers continue to report rises as the market has adjusted to the legislation. The commercial motor parc continued to increase in 2016, with light goods vehicles and company cars driving the majority of growth. However, with the UK’s vote to leave the EU it is expected that motor parc growth will slow, as businesses will have less confidence and money to invest in new commercial vehicles until the economy begins to recover. While reforms will provide instant benefits upon implementation, telematics and driverless technology will help reduce the frequency of claims in the longer term.

Scope

– Gross written premiums for the commercial motor insurance market grew by 4.5% to £4.17bn in 2016.

– The claims environment, alongside personal motor insurance, remains in a state of uncertainty around the impact of the discount rate reduction to -0.75% and whiplash claim reforms.

– There are concerns among industry experts around longer-term market profitability and the availability of reserves to bolster combined operating ratios, particularly if the predicted negative impacts of leaving the EU come to fruition.

Reasons to Buy

– Benchmark yourself against the rest of the market.

– Ensure you remain competitive as new innovations and insurance models begin to enter the market.

– Be prepared for how regulation will impact the commercial motor insurance market over the next few years.

RSA
Aviva
Allianz
NFU Mutual
AXA
Zurich
QBE
LV=
Direct Line
Ageas

Table of Contents

Table of Contents

1. EXECUTIVE SUMMARY 3

1.1. Future growth continues to be linked to economic prosperity and the ability to respond to market dynamics 3

1.2. Key findings 3

1.3. Critical success factors 3

2. MARKET DYNAMICS 10

2.1. Introduction 10

2.2. Commercial motor GWP grew slightly in 2016 10

2.2.1. The total motor insurance market grew by

10.3% in 2016 10

2.2.2. The commercial motor insurance market grew to £4.17bn in 2016 12

2.2.3. Lloyd’s of London accounts for

7.7% of the commercial motor market 12

2.3. Excluding IPT, commercial motor insurance premiums remained flat over 2016 12

2.3.1. IPT has been increased to 12% 12

2.3.2. The IPT increase kept premiums in check in 2016 13

2.3.3. Premium rates will have to rise in addition to IPT if the market is to remain profitable 13

2.4. Claims costs are putting pressure on profitability 14

2.4.1. The discount rate was changed from

2.5% to -0.75% 14

2.4.2. Insurers’ profits have been hit by the rate change 14

2.4.3. The Ogden rate change cost has impacted profitability 15

2.4.4. The MoJ is consulting on how the Ogden discount rate should be set going forward 15

2.5. Claims frequency is down but severity is increasing 15

2.5.1. CMCs have consolidated following LASPO 15

2.5.2. The ABI reports that the number of commercial claims notified remained flat in 2016 16

2.5.3. Personal injury motor claims have risen for the past two years 17

2.5.4. Whiplash claims account for up to 80% of motor personal injury claims numbers 18

2.5.5. Fraud remains a significant issue 19

2.5.6. Motor personal injury claims remain high, while RTA claims are in decline 19

2.5.7. Most RTA casualties are car occupants, but these are the least vulnerable road users 20

2.5.8. The number of RTA casualties continues to fall across all road user types 20

2.5.9. The number of pedal cyclist casualties has reached a five-year low 21

2.5.10. Larger commercial vehicles are colliding with pedal cyclists 21

2.6. The UK commercial motor parc continues to grow in a positive economic outlook 22

2.6.1. The commercial motor parc increased by

3.9% against 2015 figures 22

2.6.2. Company cars and LGVs are the most common commercial vehicle types 22

2.6.3. The number of newly licensed commercial vehicles rose slightly in 2016 25

2.6.4. The majority of commercial vehicles continue to be licensed in the South East 26

2.6.5. Road usage continues to rise as a result of a growing motor parc and cheaper fuel 27

3. COMPETITOR DYNAMICS 30

3.1. RSA, Aviva, and Allianz lead the commercial motor market 30

3.1.1. RSA has been the top commercial motor insurer for the past three years 31

3.1.2. Aviva is the second-largest commercial motor insurer 31

3.1.3. Allianz and LV= are combining to form a joint venture 32

3.1.4. NFU Mutual specializes in insuring agricultural and specialist commercial vehicles 32

3.1.5. AXA’s commercial business is growing through its mid-market proposition 33

3.1.6. Other developments from commercial motor insurers 33

4. THE MARKET GOING FORWARD 35

4.1. The Civil Liability Bill aims to reform personal injury motor claims 35

4.1.1. The benefits of LASPO did not fully materialize 35

4.1.2. Initial proposals aimed to increase the small claims track limit and remove general damages for minor soft tissue injuries 35

4.1.3. The MoJ has published its first response to the consultation on reforms 35

4.1.4. The Prisons and Courts Bill was scrapped due to the snap general election 36

4.1.5. The Queen’s Speech following the election introduced a Civil Liability Bill 36

4.1.6. There has been a split reaction to the Civil Liability Bill 36

4.1.7. Estimates suggest the Civil Liability Bill will save customers £35 on motor insurance premiums 37

4.1.8. The small claims limit will increase to £5,000 for RTA claims 37

4.1.9. A tariff system is being introduced for RTA-related soft tissue injury claims 38

4.1.10. Claims will not be settled without a MedCo medical evidence report 39

4.2. Proposed reforms will impact motor insurance profitability 40

4.2.1. Tariffs and the small claims track limit increase will have a significant impact 40

4.2.2. The increase in the small claims track could affect 70-80% of claims 41

4.2.3. Legal costs could be reduced by up to 50% 42

4.2.4. The introduction of tariffs could reduce whiplash claims costs by £1bn 42

4.2.5. The success of reforms will be dependent on how and when the market responds 42

4.3. The size of the commercial motor market will depend on rates 42

4.3.1. The future of the commercial motor insurance market is reliant upon three main factors 42

4.3.2. The dynamics of growth for the commercial motor insurance market will shift in the next few years 43

4.3.3. The economy will continue to dictate growth of the commercial motor parc 44

4.3.4. Rates may rise in response to claims inflation, but may fall due to new government reforms 45

4.3.5. IPT rises continue to drive costs for insurers and customers alike 46

4.4. Vehicle technology will reduce claims costs in the long term 46

4.4.1. Usage of telematics and safety features are increasing in the commercial motor market 46

4.4.2. 65% of businesses are using telematics in their vehicles 47

4.4.3. Some aspects of vehicle technology usage will have longer-term benefits 47

4.4.4. The government is supporting the development of driverless technology 48

4.4.5. Motorists with driverless cars will be required to have dual insurance policies 48

4.4.6. Autonomous car manufacturers are entering the insurance market for driverless cars 49

4.4.7. Motor insurers are looking to partner with driverless car manufacturers 49

4.4.8. More than half of new UK cars are now sold with autonomous features 50

4.4.9. The need for personal car insurance could diminish, causing the commercial market to grow 51

4.4.10. Driverless technology is being developed to create autonomous delivery services 51

4.4.11. Improved vehicle technologies have business benefits outside of insurance 52

4.5. Implications of other legislation under consideration 52

4.5.1. Implications of the Vnuk ruling 52

4.5.2. Environmental improvements promised through Clean Air Strategy 53

5. APPENDIX 54

5.1. Abbreviations and acronyms 54

5.2. Bibliography 54

5.3. Further reading 59

Table

List of Tables

Table 1: UK motor insurance market GWP (£m), 2012-16 11

Table 2: Licenced commercial vehicles by body type (000s), 2012-16 24

Table 3: New vehicle registrations by body type (000s), 2012-16 26

Table 4: Road traffic usage by vehicle type (billion vehicle miles), 2012-16 28

Table 5: New tariff amounts for RTA soft tissue injury claims compared to 2015 average payment for PSLA, by injury duration 39

Figures

List of Figures

Figure 1: Private and commercial motor recorded similar rates of growth over the last five years 11

Figure 2: The number of claims notified remained level in 2016 despite exposure increasing 17

Figure 3: Personal injury motor claims settled are above pre-LASPO levels 18

Figure 4: The number of RTAs has been in long-term decline but is beginning to stabilize 20

Figure 5: The majority of RTA casualties are car occupants 22

Figure 6: The UK commercial motor parc continues to grow 24

Figure 7: Company cars and LGVs make up the majority of new licensed commercial vehicles 25

Figure 8: The South East has the largest share of licensed commercial vehicles 27

Figure 9: Brexit caused the value of sterling to drop, causing petrol prices to rise 29

Figure 10: The top five motor insurers account for 54.8% of the total market 30

Figure 11: The introduction of the Civil Liability Bill will deliver significant cost savings for motor personal liability claims 41

Figure 12: The size of the commercial motor market will be dependent on how rates change 44

Figure 13: UK GDP is expected to dip as Brexit takes effect, but then slowly recover after 2018 45

Frequently asked questions

UK Commercial Motor Insurance: Market Dynamics & Opportunities 2017 standard reports
Currency USD
$3,450

Can be used by individual purchaser only

$10,350

Can be shared globally by unlimited users within the purchasing corporation e.g. all employees of a single company


Undecided about purchasing this report?

Enquire Before Buying Request a Free Sample

Get in touch to find out about multi-purchase discounts

reportstore@globaldata.com
Tel +44 20 7947 2745

Every customer’s requirement is unique. With over 220,000 construction projects tracked, we can create a tailored dataset for you based on the types of projects you are looking for. Please get in touch with your specific requirements and we can send you a quote.

Sample Report

UK Commercial Motor Insurance: Market Dynamics & Opportunities 2017 was curated by the best experts in the industry and we are confident about its unique quality. However, we want you to make the most beneficial decision for your business, so we offer free sample pages to help you:

  • Assess the relevance of the report
  • Evaluate the quality of the report
  • Justify the cost

Download your copy of the sample report and make an informed decision about whether the full report will provide you with the insights and information you need.

Below is a sample report to understand what you are buying

See what our customers are saying

“The GlobalData platform is our go-to tool for intelligence services. GlobalData provides an easy way to access comprehensive intelligence data around multiple sectors, which essentially makes it a one-for-all intelligence platform, for tendering and approaching customers.

GlobalData is very customer orientated, with a high degree of personalised services, which benefits everyday use. The highly detailed project intelligence and forecast reports can be utilised across multiple departments and workflow scopes, from operational to strategic level, and often support strategic decisions. GlobalData Analytics and visualisation solutions has contributed positively when preparing management presentations and strategic papers.”

Business Intelligence & Marketing Manager, SAL Heavy Lift

“COVID-19 has caused significant interference to our business and the COVID-19 intelligence from GlobalData has helped us reach better decisions around strategy. These two highlights have helped enormously to understand the projections into the future concerning our business units, we also utilise the project database to source new projects for Liebherr-Werk to use as an additional source to pitch for new business.”

Market Analyst & Management, Liebherr-Werk

Your daily news has saved me a lot of time and keeps me up-to-date with what is happening in the market, I like that you almost always have a link to the source origin. We also use your market data in our Strategic Business Process to support our business decisions. By having everything in one place on the Intelligence Center it has saved me a lot of time versus looking on different sources, the alert function also helps with this.

Head of Key Accounts, Saab AB

Having used several other market research companies, I find that GlobalData manages to provide that ‘difficult-to-get’ market data that others can’t, as well as very diverse and complete consumer surveys.

Marketing Intelligence Manager, Portugal Foods

Our experience with GlobalData has been very good, from the platform itself to the people. I find that the analysts and the account team have a high level of customer focus and responsiveness and therefore I can always rely on. The platform is more holistic than other providers. It is convenient and almost like a one stop shop. The pricing suite is highly competitive and value for our organisation.

I like reports that inform new segments such as the analysis on generation Z, millennials, the impact of COVID 19 to our banking customers and their new channel habits. Secondly the specialist insight on affluent sector significantly increases our understanding about this group of customers. The combination of those give us depth and breadth of the evolving market.

I’m in the business of answering and helping people make decisions so with the intelligence center I can do that, effectively and efficiently. I can share quickly key insights that answer and satisfy our country stakeholders by giving them many quality studies and primary research about competitive landscape beyond the outlook of our bank. It helps me be seen as an advisory partner and that makes a big difference. A big benefit of our subscription is that no one holds the whole data and because it allows so many people, so many different parts of our organisation have access, it enables all teams to have the same level of knowledge and decision support.

Head of Customer Insight and Research, Standard Chartered

“I know that I can always rely on Globaldata’s work when I’m searching for the right consumer and market insights. I use Globaldata insights to understand the changing market & consumer landscape and help create better taste & wellbeing solutions for our customers in food, beverage and healthcare industries.

Globaldata has the right data and the reports are of very high quality compared to your competitors. Globaldata not only has overall market sizes & consumer insights on food & beverages but also provides insights at the ingredient & flavour level. That is key for B2B companies like Givaudan. This way we understand our customers’ business and also gain insight to our unique industry”

Head of Consumer Sensory Insights, Givaudan

GlobalData provides a great range of information and reports on various sectors that is highly relevant, timely, easy to access and utilise.  The reports and data dashboards help engagement with clients; they provide valuable industry and market insights that can enrich client conversations and can help in the shaping of value propositions. Moreover, using GlobalData products has helped increase my knowledge of the finance sector, the players within it, and the general threats and opportunities.

I find the consumer surveys that are carried out to be extremely beneficial and not something I have seen anywhere else. They provided an insightful view of why and which consumers take (or don’t) particular financial products. This can help shape conversations with clients to ensure they make the right strategic decisions for their business.

One of the challenges I have found is that data in the payments space is often piecemeal. With GD all of the data I need is in one place, but it also comes with additional market reports that provide useful extra context and information. Having the ability to set-up alerts on relevant movements in the industry, be it competitors or customers, and have them emailed directly to me, ensures I get early sight of industry activity and don’t have to search for news.

Senior Account Manager, TSYS
Go even deeper with GlobalData Intelligence Center

Every Company Report we produce is powered by the GlobalData Intelligence Center.

Subscribing to our intelligence platform means you can monitor developments at UK Commercial Motor Insurance: Market Dynamics & Opportunities 2017 in real time.

  • Access a live UK Commercial Motor Insurance: Market Dynamics & Opportunities 2017 dashboard for 12 months, with up-to-the-minute insights.
  • Fuel your decision making with real-time deal coverage and media activity.
  • Turn insights on financials, deals, products and pipelines into powerful agents of commercial advantage.