Recent improvements in the UK economic environment should stimulate growth in the UK P&C insurance industry, according to a a new report from Moody's. The expected growth would support underwriting performance despite difficult market conditions, underpinning Moody's stable outlook for the sector.
The new report, entitled "UK Property & Casualty Insurance Outlook: Stable", is now available here. Moody's subscribers can access this report via the link provided at the end of this press release.
Rising general economic activity is likely to benefit both personal and commercial P&C lines, which are often influenced by economic trends, although interest rates will likely remain low compared with historical average levels, and thus continue to curtail earnings.
Notwithstanding a 3% drop in top-lines during 2013, the industry's underwriting performance improved, owing to insurers' restructuring, cost-cutting and claims efficiency programmes. "Although tough pricing conditions and declining reserve releases will exert pressure on underwriting profitability, insurers will likely pursue further cost reductions and enhance their underwriting capabilities to maintain profitability over the next 12 to 18 months," explains Helena Pavicic, a Moody's Associate Analyst and author of the report.
"Greater regulatory scrutiny is the new norm, especially in personal lines, but is manageable for the industry," added Pavicic. Furthermore, clarity around the structure and implementation date of Solvency II is a positive development for the industry as it secures a stable and credit-supportive regulatory environment.
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