LONDON (Reuters) - The British motor insurance industry could be on course for its first underwriting profit in 18 years after dramatically narrowing its losses during 2011, according to accountants Deloitte.
British car insurers paid out 106 pounds ($170) in claims and expenses last year for every 100 pounds they took in premiums, taking their collective underwriting loss to about 600 million pounds, Deloitte said on Thursday.
That compares with 120 pounds of claims and expenses per 100 pounds of claims the previous year.
“We expect improved results to be delivered by motor insurers in 2012, and we could see an underwriting profit for the industry,” said Deloitte insurance partner James Rakow.
British motor insurers, for years held back by falling prices amid intense competition, benefited in 2011 from a sharp rise in rates as the industry responded to soaring personal injury claims fuelled by “no win, no fee” lawyers.
The industry is hopeful that the rise in claims will be stemmed by proposed legislative changes aimed at curbing the activities of lawyers and other intermediaries.
Motor insurers often turn a profit despite losing money on their core underwriting activities thanks to income from investments, and from reserves set aside in previous years against claims that did not materialise.
RBS’s Direct Line Group, Britain’s biggest motor insurer, with a one-third share of the market, is planning to list on the London Stock Exchange in the second half of the year.
($1 = 0.6377 British pounds)
Reporting by Myles Neligan; Editing by Will Waterman