United Kingdom Insurance Report Q3 2016 - New Market Report

We continue to maintain a broadly positive outlook for the UK insurance industry at present. In the significantly larger life insurance sector, improving household income and strong demographic trends will bolster a positive uptick in premium growth out to 2020, leading to life insurance accounting for over 76% of all insurance premiums underwritten by 2020. Non-life sector growth will be dampened, partly a result of intense pricing pressure in highly competitive lines such as motor and property insurance, and also reflecting the overall maturity of this well-established market. Health and personal accident insurance will likely remain the strongest non-life growth sectors, outpacing the remainder of the non-life market.

Key Updates And Forecasts

New regulations under Solvency II, which became effective across the EU on 1st January 2016, have come under criticism from the UK Treasury and the Bank of England, which have submitted a call for an earlier than planned review and key changes to the European Commission. The UK Treasury reportedly has concerns surrounding long-term investments, while the Bank of England has raised technical concerns.

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The UK has announced it will hold a referendum to determine future membership of the EU on 23 June 2016. There are concerns that a potential exit of the EU would impact negatively on the UK insurance market, particularly for large UK based firms which have a strong presence across the EU and benefit from its single market status. At this stage it is also unclear what, if any, the impact would be on the UK's insurance regulatory system.

At present we are broadly maintaining our forecasts for steady growth in the UK's insurance market. The larger life sector will see strongest growth, with premiums forecast to rise by around 4.4% annually (in local currency terms) between 2016 and 2020, while non-life insurance will increase by around 1.6%.

AXA has completed its exit from the UK life insurance business by selling the last of its life divisions to Pheonix for around GBP375mn.

The UK is considering new and separate motor vehicle covers for driverless and autonomous cars and this technology begins to mature.

The United Kingdom Insurance Report has been researched at source and features BMI Research's independent assessment and forecasts for the insurance sector. It examines industry developments, key growth drivers and risk management projections, including the macroeconomic situation, government policy, regulatory environment and the level of development and potential for growth, broken down by line. Leading insurers are profiled, covering premiums, products and services and competitive positioning.

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