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Revealed: Top performers in UK motor insurance market

Revealed: Top performers in UK motor insurance market | Insurance Business UK

Revealed: Top performers in UK motor insurance market

New research suggests three players in the competitive UK motor insurance market ‘stand out by some distance’ compared to their peers.

Using 2016-2020 Solvency II data from AM Best, consultancy Litmus Analysis conducted a comprehensive review of the results of 26 motor insurers domiciled in the UK and Gibraltar, and found that the top three companies – Acromas, Sabre, and Admiral Gibraltar – significantly outperform rivals.

“The data generated here will be fascinating to many in the market because it throws up several surprises around how the performance of insurers can vary dramatically in what many might have assumed was a relatively homogenous market,” said Litmus Analysis managing director Stuart Shipperlee.

“The type of gross loss ratios delivered here by Acromas and Sabre are not unheard of among small, niche players, but they become very challenging to deliver with greater premium volume as the opportunities to risk-select to this apparent degree reduce. However, both carriers had gross written motor premiums in 2020 north of €180 million and so achieved this at some reasonably significant business scale.”

It was highlighted that Sabre and Saga-owned Acromas posted an average gross loss ratio (GLR) over five years of 53.3% and 52.5%, respectively. The median gross underwriting performance for the entire cohort stood at 72.7%.

Meanwhile Admiral Insurance (Gibraltar) Limited, a wholly owned subsidiary of Admiral Group Plc, had noteworthy results when it came to net underwriting performance. Over the five-year period, Admiral Gibraltar enjoyed a net loss ratio (NLR) of 33%. Acromas’ five-year NLR was a striking negative (yes, minus) 28%; Sabre’s, 45%; and the cohort’s median result, 69%.

Shipperlee noted: “The underwriting opportunities that can come from smaller books even within larger insurance groups are highlighted by two UK motor operations too small to make our cohort (below €50 million gross written premium). Motors Insurance delivered a five-year GLR of 39.4% (€10 million of 2020 motor GWP) while Hiscox’s UK carrier came in with a 48% GLR average (€24 million of 2020 motor GWP).”

“The impact of reinsurance usage tells an interesting story,” added the managing director. “Comparing UK Insurance (third place in the five-year GLR table but fifth on the NLR basis) with Admiral Gibraltar (by far the larger of the two Admiral carriers in our cohort) highlights the potential impact of reinsurance.

“UK Insurance gives up a couple of points in its five-year NLR versus the GLR (as would be what one would commonly expect economically – assuming it is paying to reduce volatility). But Admiral Gibraltar gains a whopping 31%, reducing a 64% five-year GLR to an NLR of 33%. Acromas and Admiral Gibraltar both cede a lot of their book (retention percentages in the mid-20s). In essence they are very substantially using their reinsurers’ capital to write the gross volumes that they do. Sabre, by contrast, retains over 90% of gross premium.”

Interested industry stakeholders can reach out to Litmus for a full version of the report.