StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...

The UK Motor Insurance Industry - Essay Example

Cite this document
Summary
Motor insurance is the largest sector in the UK general insurance market. In 2005 it was worth 10.4bn (Premiums and claims 2005 p.6). It has the advantage of a vast consumer base, as motor insurance is compulsory for the 40 million licence holders in the UK…
Download full paper File format: .doc, available for editing
GRAB THE BEST PAPER94% of users find it useful
The UK Motor Insurance Industry
Read Text Preview

Extract of sample "The UK Motor Insurance Industry"

Download file to see previous pages

The last few years have seen the major insurers cut costs and attempt to consolidate their market share with a wave of mergers and take-overs. The current state of the industry is marked by competition. The future will be driven by innovation, and will benefit the UK consumer. The private motor underwriting result deteriorated in 2005, as the market returned a loss of 232 million. The private motor underwriting loss has been increasing since 2001 when it approached the break-even mark with a loss of only 86 and the market has not made a profit since 1994.

This has resulted in the consolidation of the industry as smaller insurers find it more difficult to compete. In both private and commercial motor insurers, the top 20 companies are responsible for over 95% of the business (The Association of British Insurers 2007). This trend is likely to continue as smaller companies continue to stand losses and are forced to merge, consolidate, or innovate. The Internet has offered brokers a new low cost outlet to offer competitive rates to consumers. According to Lee Mooney, Admiral motor product group manager says, "The Internet is growing in importance as a medium because of the savings it can offer big insurers"(Lorenz 2002 p.12). The obvious success of direct insurance companies prompted traditional insurance players to set up their own distinct direct insurance brands.

It is forecast that by the end of 2007, 20% of the motor insurance will be sold over the Internet (The Association of British Insurers 2007). "The development of websites and of broadband Internet access is likely to lead to more integrated insurance purchasing, as consumers research the Web and then choose a direct supplier either online or through a retail outlet" (The Association of British Insurers 2007).One of the driving forces behind the need to lower costs through direct marketing has been the increased cost of servicing claims.

The nature on motor insurance is such that the client is paying a fee now for a service to be rendered in the future (Abdelhamid 2005 p.214). Fluctuations in claims due to inflation and rising repair rates may exceed the premium value. This has forced insurers to become dependent on the value of the return on the invested premiums. When investment value drops, this places the insurer in jeopardy of taking a loss on the claim. This has had the effect of promoting lower cost Internet and call centre based sales activities.

As direct marketing companies proliferate they also look to differentiate their products. In 2005, Admiral launched MultiCar. Drivers who have 2 or more cars in their household could get a discount of up to 23% on their motor car insurance (Cheap Car Insurance). Norwich, a division of Aviva since its merger with CGU in 2000, offers the pay as you drive program. They offer a black box telemetry system that bills you for the miles you drive (Could pay-as-you-drive insurance work 2004). Innovations in service and pricing will continue to drive the industry.

Norwich Union, the largest automobile insurer in the Great Britain, has set up its own medical clinic to treat victims of car accidents involving its policyholders. They have their own clinics, doctors and therapists that treat people making claims. It quickens recovery, cuts costs, and limits the potential of future litigation. This is one more innovation that is driving the motor insurance industry. Motor insurance has gone through a revolution

...Download file to see next pages Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“The UK Motor Insurance Industry Essay Example | Topics and Well Written Essays - 1000 words”, n.d.)
The UK Motor Insurance Industry Essay Example | Topics and Well Written Essays - 1000 words. Retrieved from https://studentshare.org/business/1516096-the-uk-motor-insurance-industry
(The UK Motor Insurance Industry Essay Example | Topics and Well Written Essays - 1000 Words)
The UK Motor Insurance Industry Essay Example | Topics and Well Written Essays - 1000 Words. https://studentshare.org/business/1516096-the-uk-motor-insurance-industry.
“The UK Motor Insurance Industry Essay Example | Topics and Well Written Essays - 1000 Words”, n.d. https://studentshare.org/business/1516096-the-uk-motor-insurance-industry.
  • Cited: 0 times

CHECK THESE SAMPLES OF The UK Motor Insurance Industry

Jaguar Cars on Car Market in the UK

Jaguar launched a wide ranging online and mobile campaign in September 2006 for its new XKR sports car, which was officially unveiled at The London motor Show.... Therefore Ford strategically placed its Jaguar brand in uk and other EU nations.... uk market is a very diverse market in general which caters to customers/ consumers from different walks of life, different cultures, ethnic groups and age groups....
7 Pages (1750 words) Essay

The Trends in Auto Industry

In the paper “The Trends in Auto industry” the author discusses new trends in car designs, which are evolving in the developing countries like India.... China is the leading importer of petroleum to support the ever-growing demand of the automobile industry.... Other countries like Russia, Mexico, and South America have also seen major growth in the car industry in 2007....
14 Pages (3500 words) Assignment

Insurance industry issues: Uk and USA

Though, in this report you will get to know about the issues which are currently of importance to the UK insurance industry and make a comparison between the situations facing insurance in the UK with that facing the insurance market of USA.... motor insurance Driving is an activity which everyone, or almost everyone, practices successfully; it is generally felt to be an easy task, an everyday activity at which everyone is almost perfect and whose risks are therefore underestimated....
16 Pages (4000 words) Essay

Hyundai Profitability Increase in the UK Car Market

The study "Hyundai Profitability Increase in the uk Car Market" examines the key major factors that contribute to Hyundai Motor Company's financial success despite the tight competition in the global market.... Eventually, the researcher will conduct a literature review as a way of examining whether or not mergers and acquisitions contribute to the increase in Hyundai's profitability in the uk car market despite the tight global competition.... hat are the strategic approaches that enable Hyundai to increase its profitability despite the tight competition in the within the uk automobile industry?...
5 Pages (1250 words) Case Study

The Challenges and Opportunities Facing the Ford Motors Company

government particularly by increasing taxes on the automobile industry has affected the operation of the company in recent times where it service high taxes in order to be able to operate.... The paper analyzes Ford Motors through PESTEL analysis to identify its challenges and opportunities....
8 Pages (2000 words) Essay

Analysis of Operation Situation and Competition of UK Insurance Industry

The insurance industry has been chosen for this project looking at the importance of this industry in terms of its contribution to the economy of UK.... The insurance industry has played a vital a vital role in covering the customers from the risks of investment, health and education, etc.... The first part of the paper includes PEST and Porter Five Forces analysis, while keeping in view the industry trends and environment.... This activity has been carried out with the help of ratio analysis; comparison of key financial indicators against closes competitors and industry standards....
28 Pages (7000 words) Essay

Integrated Marketing Commucations for Toyota Motors

nbsp; Toyota Motor is a Japanese company that has ventured into the international automobile industry since 1937.... This article takes special attention to the IMC strategy that Toyota motor Company has deployed, it impacts and drawbacks.... The company deals with the design of automobile and other vehicles wholesale and automobile parts (Toyota motor Corporation, 2015)....
13 Pages (3250 words) Essay

Insurance Fraud: Expert Review

There are several instances that officially educate fraud experts; they include ACFE, ICFS, and Accredited Counter Fraud Specialists (ACFS) in the uk.... "insurance Fraud: Expert Review" paper identifies several challenges concerning fraud experts and their qualifications required for the position.... hellip; The development of a training program is required to educate investigators about current trends in insurance fraud which do not correlate with their professional experience....
7 Pages (1750 words) Coursework
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Contact Us