UK non-life insurers recorded a loss on their underwriting in 2018, off the back of particularly poor combined ratios (CORs) in the fields of property cover and workers compensation.
The net COR across all non-life lines of UK business was 104.3%. The sharpest losses came in fire and other property damage (112.8%) and workers compensation (115.8%).
A net COR above 100% signifies an underwriting loss. More particularly, it shows the claims and expenses linked to premiums have cost an underwriter more than the net income it earns from those premiums.
To reveal the performance figures, Insurance Risk Data, the data arm of InsuranceERM, analysed information in last year’s Solvency II filings for more than 1,200 non-life insurers across Europe. There were almost 100 UK undertakings in that sample.
It was another consecutive losing year for the UK non-life industry, after registering net CORs above 100% in 2017 (103%) and in 2016.
The UK industry was the second worst across the EEA last year; only Ireland had a higher net ratio of 108.5%.
Other countries to underwrite at a loss were Iceland (103.5%), Norway (101.4%), Cyprus (101.6%) and the Netherlands, although Dutch non-life underwriters almost broke even with 100.2% as their net COR.
The UK’s non-life premiums of €83.7bn were Europe’s fourth most voluminous, after Germany (€114.6bn), the Netherlands (€96.2bn) and France (€94.5bn).
Of this leading trio, Germany’s and France’s non-life underwriters picked the ‘right’ risks to cover, resulting in net CORs of 95.2% and 93.7% respectively.
For a second year running, Spain’s underwriters were Europe’s best, notching up a net COR of just 40.4%, driven by low claims for medical expense (11.8%) and income protection (33.4%). The country’s sector had only one losing line of business, in credit and suretyship (121.9%).
In only five countries did underwriters ply their trade profitably in each of the 13 lines of cover that are listed on the data template provided by the European Insurance and Occupational Pensions Authority. These were Germany, the Czech Republic, Estonia, Poland and Slovakia.
Insurance Risk Data’s analysis excluded entities whose net CORs were negative. There were deemed unreliable, even though the data was typically what the company had filed. IRD also excluded the few instances where net CORs exceeded 1,000%.
- The details about European non-life insurers, including their underwriting performance in 2017 and 2018, and various breakdowns of their general account investment patterns, will appear in a comprehensive report on the region’s non-life industry being published by Insurance Risk Data this year. The information will encompass EEA underwriters as well as individual Lloyd’s syndicates. To find out more about Insurance Risk Data and various reports it has planned for 2019, please email [email protected]