The push for volume in motor has started again, with a fall in rates for a fourth consecutive quarter, while home is proving more resilient says Tom Cooper, Executive Director, iGO4
For the fourth consecutive quarter, the iGO4 price index, detailing the best motor quote across 750 separate risks has fallen, this time by 4.2%, and the market is now soft rather than flat. In the
last quarter’s review, consideration was given to whether this was a mere correction of overcooking previous increases, but it is now clear there is a huge push for volume once again, with the direct writers leading the way. Reasons for this are varied and fly in the face of 2011’s collective underwriting performance, which produced a loss-making combined ratio of 106%, despite the rate increases that had flowed through 2010 and the first half of 2011.
The major protagonists will all have their own reasons for such an approach; there are the stated IPO intentions of Direct Line Group, Esure and Hastings for a start; and, for some, the need to support large operating cost bases, with the money given away at point of sale potentially underpinned by renewal income from large back books. Direct writers are dominant despite the continued retraction of competition and, as with the Spring 2012 watch observation, there has been as a 20% reduction in the number of prices returned on some risks, compared to the previous quarter. iGO4 recently experimented withdrawing from a particular segment on one site and witnessed up to a 50% increase in sales through other sites for the same business, providing further evidence that consumers visit more than one site when shopping around.
If you wish to read more please view the Post Magazine Article
*Taken from the Post Magazine July 2012