Competition in UK Commercial Property Insurance 2008

Content

• Overview
• Catalyst
• Summary
• Executive Summary
• The Market Contracted Marginally In 2007 Due To Significant Premium Rate Cuts
• The Uk Market Contracted Slightly In 2007 To 445 Million
• Premium Rates Continued To Fall In 2007, Although Downward Momentum Lessened Toward The End Of The Year
• Product Penetration Rates Increased Among Smes, As Awareness Of Liabilities Has Grown
• Brokers Continued To Dominate The Distribution Of Commercial Insurance
• Broker-Led Operations Remain The Principle Route To Market
• Commercial Liability Products Are The Least At Risk To The Direct Channel And Likely To Remain Brokered
• Despite Significant Expansion The Market Is Still Dominated By Aig, Ace And Chubb
• Aig Continued As The Market Leader In The Uk Market, As Market Share Remains Over A Quarter Of The Market
• The Proportion Of The Market Written By Lloyd's Insurers Increased Slightly In 2006
• The Uk Directors' And Officers' Insurance Market Is Forecast To Increase To 672m By 2012
• The Market Will Grow Continuously After 2008, Driven By Higher Premium Rates And More New Business
• Table Of Contents
• Table Of Figures
• Table Of Tables
• Market Context
• Introduction
• The Market Contracted Marginally In 2007 Due To Significant Premium Rate Cuts
• The Uk Market Contracted Slightly In 2007 To 445 Million
• Premium Rates Continued To Fall In 2007, Although Downward Momentum Lessened Toward The End Of The Year
• Product Penetration Rates Increased Among Smes, As Awareness Of Liabilities Has Grown
• The Market Was Still Profitable In 2007 But Margins Were Reduced
• The Market As A Whole Was Profitable In 2007 Due To A Benign Claims Experience
• The Longer Tail Nature Of The Market Makes Determining Its Profitability Difficult
• The Claims Experience Is Expected To Worsen In 2008, Although 2007 Was Mild
• Uk Claims Were Reported To Be Light In 2007, Although Suggestions Are That This Is Temporary
• The Sub-Prime Loan And Credit Crunch Could Lead To Large Claims For Even Uk Insurers In 2008 And 2009
• The London Markets Exposure May Be Limited To 250m
• Royal & Sunalliance Underwrote Northern Rock's D&O Policy
• The New Companies Act Will Increase Claims Costs By Allowing Easier Law Suits Against Directors
• The New Corporate Manslaughter Offense May Increase Claims Costs
• European Union Transparency Directives Have Required More Frequent And Detailed Reporting That Opens Directors Up To More Liability
• A Greater Willingness By Uk Investors To Litigate Will Increase The Claims Bill For Uk Insurers
• D&O Insurers Have Extended Or Made More Explicit Their Coverage Of A Number Of Risks
• The Soft Market Lowered Premium Rates But Also Extended Cover And Insurers' Liability
• High Profile Extradition Proceedings Have Caused A Number Of Insurers To Highlight This Cover
• Initial Public Offering Cover Has Become More Of An Issue For Smaller Firms
• Pr Cover Is Becoming Increasingly Important In D&O Policies
• Distribution Dynamics
• Introduction
• Brokers Continued To Dominate The Distribution Of Commercial Insurance
• National Brokers Have Lost Distribution Market Share To The Direct Channel, Chain Brokers And Telebrokers
• The Direct Channel Increased Its Share Of Commercial Insurance Gwp By 1% In 2006
• Affinity Groups Remain A Small Channel For The Distribution Of Commercial Insurance
• Banks And Building Societies Continue To Play A Small Role In The Distribution Of Commercial Insurance
• Directors' And Officers' Insurance Is Primarily Distributed Through The Broker Channel
• Broker-Led Operations Remain The Principle Route To Market
• Commercial Liability Products Are The Least At Risk To The Direct Channel And Likely To Remain Brokered
• Direct Offerings Are Increasing In Other Liability Lines However, And Brokers Cannot Afford To Be Complacent
• Large Corporates Continued To Be A Staple For D&O Insurers But Smes Grew In Importance
• D&O Is No Longer The Preserve Of Just Large Corporate Risks As More Smes Become Aware Of Their Liability
• Smes May Be Increasing Their Uptake Of D&O But Product Penetration Remains Low
• Smes Were Least Likely To Consider Purchasing Directors' And Officers' Cover Without Face-To-Face Contact
• Electronic Trading Platforms Are Assisting Brokers And Insurers, Even In The Complex World Of D&O
• Most Smes Buy Insurance Via Brokers, But Direct Insurers Also Distribute A Significant Part Of The Market
• Competitive Dynamics
• Introduction
• Despite Significant Expansion The Market Is Still Dominated By Aig, Ace And Chubb
• Aig Continued As The Market Leader In The Uk Market, As Market Share Remains Over A Quarter Of The Market
• Ace Updated Its D&O Policies In Light Of The New Companies Legislation
• Chubb Updated Its Product Range In 2007
• Insurers With Smaller Exposures To The Uk Market Were Also Active In 2007
• Markel Updated Its Policies, Although It Suffered A High Profile Claim In 2007
• Catlin Continued To Grow, Though From A Small Base
• Liberty Acquired An Underwriting Agency And Released A New D&O Product
• Cna Launched A New Policy Targeting Both Sme And Large Corporate Risks
• Zurich Expanded Its Presence In The Uk Directors' And Officers' Insurance Market
• Royal & Sunalliance Suffered Large Claims Due To The Sub-Prime Crisis
• The Proportion Of The Market Written By Lloyd's Insurers Increased Slightly In 2006
• Future Decoded
• Introduction
• The Uk Directors' And Officers' Insurance Market Is Forecast To Increase To 672m By 2012
• An Increase In Claims Frequency And More Firms Taking Up The Cover Will Force Insurers To Increase Premium Rates
• The Market Will Grow Continuously After 2008, Driven By Higher Premium Rates And More New Business
• Appendix
  • Supplementary Data
  • Performance Ratios
  • Definitions
  • Employers' Liability
  • Professional Indemnity
  • Directors' And Officers' Liability
  • A-Side Coverage
  • B-Side Coverage, Corporate Reimbursement
  • C-Side Coverage, Entity Securities Coverage
  • Employment Practices Liability
  • Earned Premiums
  • Written Premiums
  • Gwp
  • Nwp
  • Methodology
  • Primary And Secondary Research
  • Data On The Lloyd's Market
  • Datamonitor's Commercial Broker Survey
  • Competitor Estimates
  • Further Reading
  • Ask The Analyst
  • Datamonitor Consulting
  • Disclaimer
  • List Of Tables
  • Table 1: Uk Directors' And Officers' Insurance Gwp, 2003e-07e (m)
  • Table 2: Quarterly Movement In Premium Rates, 2005 Q2-2007 Q4
  • Table 3: Status Of Us Securities Class Action Cases In Q1 2008 By Year Filed, 2002-07 (%)
  • Table 4: Market Share Of Distribution Channels In The Commercial General Insurance Market, 2003-06
  • Table 5: Lloyd's Premium Income And Share Of The Uk Directors' And Officers' Market, 2002-06
  • Table 6: Key Variables Affecting Directors' And Officers' Insurance Gwp, 2007e-12f
  • Table 7: Forecast Of Uk Directors' And Officers' Insurance Gwp, 2003-12f (m)
  • Table 8: Total Uk Liability Gwp By Competitor, 2002-06
  • Table 9: Total Uk Liability Gwp By Competitor, 2002-06 Cont'd
  • Table 10: Total Uk Liability Market Share By Competitor, 2002-06
  • Table 11: Total Uk Liability Market Share By Competitor, 2002-06 Cont'd
  • Table 12: Commercial Liability Competitors By Loss Ratio, 2002-06
  • Table 13: Commercial Liability Expense Ratio By Competitor, 2002-06
  • Table 14: Commercial Liability Combined Ratio By Competitor, 2002-06
  • Table 15: Commercial Liability Commission Ratio By Competitor, 2002-06
  • Table 16: Commercial Liability Management Expense Ratio By Competitor, 2002-06
  • Table 17: Commercial Liability Net Gross Premium Ratio By Competitor, 2002-06
  • Table 18: Commercial Liability Net Gross Premium Ratio By Competitor, 2002-06 Cont'd
    • List Of Figures
  • Figure 1: Uk Premium Income Declined In 2007 Due To Reductions In Premium Rates
  • Figure 2: Premium Rates Headed South Between Q3 2005 And Q4 2007
  • Figure 3: Many Claims Are Not Paid Out In The Year In Which The Policy Was Underwritten, As It Can Take A Number Of Years For Claims To Settle
  • Figure 4: National Brokers Dominate The Distribution Of Commercial General Insurance In The Uk In Terms Of Gwp
  • Figure 5: Commercial Liability Is Believed To Be The Least At Risk To The Direct Channel
  • Figure 6: Smes Are Buyers Of A Range Of Commercial Insurance Products
  • Figure 7: Smes Recognize The Need For Face-To-Face Discussion With An Expert When Arranging Their D&O Cover
  • Figure 8: The Distribution Of Insurance To Smes Remained Largely Under The Control Of Brokers In 2007
  • Figure 9: Aig Is The Largest Player In The Uk D&O Market
  • Figure 10: Lloyd's Insurers' Share Of D&O Gwp Is Little More Than Half Its Height In 2003
  • Figure 11: The Market Is Set To More Than Double In Size In 2012 Compared To Its Level In 2003