Vitality is the newest UK insurer to exit the motor insurance coverage market as a result of hovering claims prices after RSA left the market in March 2023. If this development continues, the main gamers will turn into stronger and are more likely to face much less pricing stress from challengers. Competitors available in the market will fall in consequence, with unfavorable impacts on shoppers.
GlobalData’s 2022 UK Insurance coverage Shopper Survey discovered that Vitality had a negligent share of UK motor insurance coverage, after solely coming into the market in 2021. RSA was additionally not a significant participant within the UK motor insurance coverage area with shares of 0.5% in 2021 and 0.4% in 2022. Nevertheless, it’s a large identify within the insurance coverage trade, and the supplier finally determined it was higher off exiting this market to guard its general mixed working ratio.
That each a big international insurer and one that’s trusted by shoppers in different strains (well being) ended up leaving the motor insurance coverage market is a worrying development. The strikes emphasise simply how onerous it’s to enter the UK motor insurance coverage area within the present local weather.
The third-largest participant within the UK motor insurance coverage market (with a share of 8.3% in 2022), Direct Line has taken another route. It has launched a motor possession app referred to as Caha. The aim of this app is to assist prospects handle and retailer all of their driving paperwork in a single place. It additionally has options equivalent to discovering parking areas. That is probably a method to enhance retention charges and entice new prospects by making the general proposition stronger. It’s onerous for insurers to chop premiums at current amid such excessive claims inflation, so taking a look at different methods they’ll strengthen their proposition and add worth seems a smart technique. General, the larger gamers look set to extend their dominance over the UK motor insurance coverage market. They’ve extra functionality to face up to this troublesome interval, and probably even supply prospects additional advantages equivalent to Direct Line is starting to do. Consequently, we count on to see extra suppliers with smaller shares of the market lower their losses, following RSA’s and Vitality’s lead.
