The sTaTs – The acTuris premium index
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| www.insuranceage.co.uk | June 2012 42 www.insuranceage.co.uk/tag/statistics Management | Statistics THE STATS – THE ACTURIS PREMIUM INDEX 105 100 95 90 80 85 Indexed average premium across all indices (Q2 2007=100) Q1 2009 Q1 2010 Q1 2011 Q2 2009 Q2 2010 Q3 2011 Q2 2011 Q4 2011 Q3 2009 Q3 2010 Q1 2012 Q4 2009 Q4 2010 96.4 103.6 90.7 92.5 85.6 l e quarterly statistics in the Acturis Premium Index have reinforced once again what a tough year 2011 was for the insurance industry and the findings show that, unfortunately, 2012 has not started much better. Broadly speaking, commercial combined, fleet and combined liability business was flat with minimal increases or decreases in average premium sizes. However, property owners’ did increase considerably over the three months, packages went in the opposite direction. Looking through the insurer results for 2011, personal lines business has been driving the improvement in combined operating ratios pretty much across the improvement of around 5% and exposure increases of between 3-4%. With respect to fleet business he continues: “is year we have seen exposures and vehicle numbers move forwards. It is only one quarter and it might flatten out but it is still very encouraging.” e year-on-year figure comparing the first quarter in the index show average premiums increased by only 1%. Commercial combined Packages Fleet Combined liability Property owners board while it has been tough going with commercial business. According to Acturis’ data, any increases being pushed through by insurers are being more than netted off by business shrinkage. In other words, economic strain is pulling the final numbers down. But one area in particular has stuck out for providers as not matching their experience. “e one that stands out is fleet,” says Dave Smith, UK managing director, commercial broker at Zurich. “ere is no market you will talk to that will say they are not getting rate increase in fleet.” For Mr Smith the first quarter has proved to be a successful one. Across all lines the insurer has seen rate Fleet 2% -2% -2% 1% -2% -1% 0% 2% -1% 2011 Overall New business Renewals Q1 2010 Q1 2011 Q3 2011 Q2 2010 Q2 2011 Q4 2011 Q3 2010 Q1 2012 Q4 2010 99 99 93 95 101 102 2012 (year to date) Growth in average premium compared to the same quarter in the previous year Comparison of average premium for whole year (2007=100)
Transcript of The sTaTs – The acTuris premium index
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Management | Statistics
The sTaTs – The acTuris premium index
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l The quarterly statistics in the Acturis Premium Index have reinforced once again what a tough year 2011 was for the insurance industry and the findings show that, unfortunately, 2012 has not started much better. Broadly speaking, commercial combined, fleet and combined liability business was flat with minimal increases or decreases in average premium sizes. However, property owners’ did increase considerably over the three months, packages went in the opposite direction.
Looking through the insurer results for 2011, personal lines business has been driving the improvement in combined operating ratios pretty much across the
improvement of around 5% and exposure increases of between 3-4%.
With respect to fleet business he continues: “This year we have seen exposures and vehicle numbers move forwards. It is only one quarter and it might flatten out but it is still very encouraging.” The year-on-year figure comparing the first quarter in the index show average premiums increased by only 1%.
Commercial combined
PackagesFleet Combined liability
Property owners
board while it has been tough going with commercial business.
According to Acturis’ data, any increases being pushed through by insurers are being more than netted off by business shrinkage. In other words, economic strain is pulling the final numbers down. But one area in particular has stuck out for providers as not matching their experience.
“The one that stands out is fleet,” says Dave Smith, UK managing director, commercial broker at Zurich. “There is no market you will talk to that will say they are not getting rate increase in fleet.” For Mr Smith the first quarter has proved to be a successful one. Across all lines the insurer has seen rate
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Growth in average premium compared to the same quarter in the previous year
Comparison of average premium for whole year (2007=100)
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Explaining the figuresThe quarterly figures, compiled by Acturis’ Will Smith, are calculated on a base line from the second quarter of 2007. These three monthly movements are supported in the text by year-on-year developments. In this manner the analysis highlights both short term trends affecting brokers on a day-to-day basis along with longer view comparisons that are most likely to set the pricing of similar risks against each other.
He is more in tune with the numbers on packages, where he references intense competition in the market. Average premiums for packages have reduced by 5.6 points in the quarter as measured by Acturis. “We are seeing rates moving forwards but I can well imagine other people are not,” he comments. “As people put their products online there is more competition and there are more players in the market.”
Overall Mike Crane, commercial director at LV Broker, says he finds the numbers a bit more depressing than the insurer’s slightly more positive view but, like Mr Smith, he is far from dismissive of the results. “[The market] has not really moved a lot but that is not to say that it shouldn’t have moved,” he
states. “If you look at pressure on rates then there is still claims inflation coming through and there is still a strong need for rate improvement on all those [lines]. My view is that this is going to be a tough year.”
In particular, for packages, he says that on smaller premiums the provider is positive for rate year-on-year: “I would have expected, if it is smaller average premium, that it is gaining a bit more traction.”
Neil Clutterbuck, director, underwriting and technical at Allianz Commercial, is similarly certain that the figures do not reflect the insurer’s experience in fleet. Another that stands out for him is combined liability. The Acturis Premium Index registered a year-on-year quarterly fall of 1%.
However, Mr Clutterbuck says: “If I went back over the last three years then we have nudged forward on rate. We have had growth across both employers’ liability and other liabilities such as professional indemnity and D&O. In the first quarter of 2012 we have seen the
opportunity for further rate hardening.”One line of business that largely escaped
comment was commercial combined. It may well be a major player in many brokers’ books but it is rarely a major mover in the first quarter of the year. Brokers will have been pleased to see that at least the small movement was upwards but, as the graph on page 42 shows, the big changes have tended to be between the
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first and third quarters of any year. In effect, the positive movement is good news, but no guarantee of ongoing hardening.
For this quarter the survey has the chance to finish with some good news. Property owners’ has been the star sector over the past three months. It is 2% ahead compared with the same period in 2011 and, after rising by 2.8 points in the quarter, it is the only sector ahead of the baseline rate of 100 in Q2 2007.
According to Mr Smith, despite this progress, it is a line that still needs further rate hardening. “Property does need rate, everybody will tell you that,” he says. “But when good property business comes on the market somebody will take a punt.”
And what of that future? Is there light at the end of the soft market tunnel? “If you are
waiting for a hard market such as the one in early 2000 you will be waiting a long time,” he concludes. “I think rates will move forward over the next few years but it will be very similar to our experience for the last two years, it will be 5-6% for the good insurers and 2-3% for those who will see problems in the future.”
The numbers predicted by Mr Clutterbuck are similar although he accepts there may be a degree of vain optimism on his part. “None of us are asking the earth from that perspective but it [hardening] does need to keep pace with claims inflation,” he points out.
Brokers have already become accustomed to the fact that, with aggressive appetite still out there in the market and the outlook for the broader economy looking anything
but sunny, the market is unlikely to harden before 2013 at the earliest. However, as the commentators have noted, individual circumstances can differ from the crowd so now, more than ever, those with a quality offering are likely to succeed.
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Growth in average premium compared to the same quarter in the previous year
Comparison of average premium for whole year (2007=100)
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onLine▶▶ To see the last Acturis Premium Index and for more statistics go to www.insuranceage.co.uk/static/pb-stats
