Dublin-based consultants Research and Markets has produced a report, “Five Factors That Will Shape the Future of UK General Insurance,” which “provides five key predictions for the state of the UK general insurance market in 2007 and beyond, and explains the impact of these predictions on the insurance industry. Prdictions discussed include the rise of Internet distribution and the length and severity of the soft cycle.”
According to one finding, auto policies sold online are set to more than double over the next three years from around 12 percent of the market in 2005 to over 29 percent by 2009.
The scope of the title includes:
— Estimates the percentage of motor and household insurance sold via the Internet and forecasts for the growth of this channel to 2009.
— An overview of forecasts for the soft cycle, explaining why it is expected to be less severe than previous soft cycles.
— Forecasts for the creditor market, where media scrutiny is expected to lead to a slump as penetration rates and commission rates fall.
In addition to the growth predicted for the online sales, R&M’s report also concludes the following:
— The predicted growth will be driven largely by the direct channel and the continued transference of business from the telephone to the Internet.
— Premium income growth is forecast to pick up for many lines in 2007 with the result that insurers profitability should suffer less in this soft cycle than in previous slumps.
— The regulatory and media scrutiny of the PPI insurance sector is likely to lead to a drop in penetration and commission rates. This will lead to declining premium income, before the market stabilizes beyond 2007. The compound annual growth rate for all lines of PPI between 2006 and 2010 is forecast to be just 1.7 per cent under these assumptions.
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