This highlights the extent to which the market is hardening and highlights insurers' desire to drive the market back to profitability.
The report also found that Insurers' gross written premiums rose by 14.1% in 2001, making the market worth £5.6 billion. The industry has been hit by soaring reinsurance rates, and heavy claims experiences in recent years. Claims are increasingly dominated by damage caused by weather, which now accounts for almost half of all claims. In response to this, many insurers are dropping market share by removing unprofitable business from their books. Retailers are increasingly interested in offering insurance products, and this sector of the market grew by 70%, in terms of gross written premiums, in 2001.
In 2001 seven of the top ten household insurers dropped market share, with Norwich Union registering the biggest decline with a 5.7% loss. "2001 saw the top ten insurers lose a further 8.6% to the rest of the market, in addition to the 1.4% lost in 2000,” said George Wigley, Datamonitor financial services analyst and author of the report. “This shows the continuance of the trend whereby household books are being 'cleaned' of unprofitable and non-core business. Profitability is still the key concern, and the large insurers are prepared to continue conceding market share in return for a better underwriting result."
Although brandassurers have only 3% market share, their GWP grew by over 70 per cent in 2001, as more and more retail players started to offer insurance products. In March 2003, Asda, the UK's third largest supermarket, began a major assault on the financial services market by launching its own insurance portfolio. The move meant that the top three UK supermarkets now offer household insurance, along with high street stores like Marks & Spencer, Argos and Debenhams. With large and regular customer bases (Asda claims to have 11 million regular shoppers), there are obvious sales opportunities for these companies, particularly from supermarkets as they push to provide for more and more of their customers' retail needs.
