The Tough Road Ahead for Motor Insurers: It's Time To Look Beyond

According to a recent report by Oxbow Partners, the road ahead for motor insurers is going to be particularly tough. In fact, the report predicts that the UK motor insurance market will exceed a combined operating ratio (COR) of more than 100% in 2023, making it a challenging year for insurers.

The report cites claims inflation as the main reason for the high COR forecast, which is expected to remain elevated throughout the year. Oxbow Partners predicts an overall market COR of 106%, with overall profitability expected to be around 26% lower than pre-Covid levels. This is undoubtedly a tough time to be a motor insurer, as shareholders and boards will be asking questions around where all the profit has gone.

But it’s not all bad news. Oxbow Partners also predicts that profitability in 2023 will be better than last year, with a market operating profit of £1bn – 25% higher than 2022. The pricing cycle remains hard, with premiums increasing faster in the first quarter than many had expected. Motor insurance customers will have seen increased prices both from their existing insurer at renewal and when searching for the best deal from other providers. This will ultimately put the industry in a better position once the new rates earn through.

Looking ahead to 2024, Oxbow Partners predicts that the market will get back to break even and the earn-through of 2023 premium increases will offset ongoing claims inflation. It said this would result in a lowered market COR of 100%. But the report also warns that the distribution of profit could be quite different from 2019, with companies with lower expenses being the natural winners.

As an insurance executive, it’s important to take note of these predictions and prepare accordingly. The challenges facing the motor insurance market are significant, and it’s important to be proactive in finding solutions. One potential solution is parametric insurance, which uses real-time data to provide coverage for specific events. This type of insurance can be particularly useful in situations where traditional insurance may not be sufficient, such as natural disasters or other catastrophic events.

At Riskwolf, we specialize in helping insurers build and operate parametric insurance at scale. Our unique real-time data and dynamic risk modeling enable insurers to turn real-time data into insurance quickly and reliably. If you’re interested in learning more about how parametric insurance can help your business navigate the challenges ahead, get in touch with us today.

In conclusion, the road ahead for motor insurers is undoubtedly tough, but it’s not insurmountable. By being proactive and exploring new solutions like parametric insurance, insurance executives can help their businesses weather the storm and come out stronger on the other side. To read the original article by James Cowen, click here: https://www.insurancetimes.co.uk/news/tough-2023-predicted-for-motor-insurance-market-as-high-cor-forecast/1444822.article