UK motor risks
The Group's motor insurance risk written in the UK commercial division is in the UK and Eire which covers fire, theft, collision and third party property and bodily injury liability. 99% of this portfolio is UK business. Under the requirements of UK law third party liability coverage is unlimited, but matching reinsurance is purchased. The account is biased towards commercial clients such as coach operators, haulage companies, commercial vehicle fleets and company executive fleets. There is also a UK agriculture and a specialist private car account written.
Claims frequency has improved in recent years due to car and road safety measures but can fluctuate due to factors such as weather conditions. UK inflation is the key factor in determining the size of motor claims. Car values affect the size of theft claims and for metal damage claims size is linked to repair costs. Courts award inflation within the UK and Irish legal systems impact liability claim values. Government intervention such as liability award limit changes or expense recoveries for government bodies such as the NHS will also impact claim size. Severe bodily injury and catastrophe damage claims (e.g. UK flood) are limited through the purchase of a reinsurance programme, the highest layer of which is unlimited.
Motor insurance is a highly competitive area of insurance and pricing levels fluctuate. Whilst underwriters accept business subject to sufficient rates per vehicle, in a year where there is an unexpectedly high level of claims the total premium may not be sufficient to cover all the claims.
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