Norwich Union to Increase Car Insurance Premiums by 16 Percent

Strategic Insights -

Norwich Union, the second-largest motor insurer in the UK, will raise its car insurance premiums by around 16 percent over the next year, citing the need to cover rising claim costs. This move is expected to be echoed by other insurers in the industry, which has seen stiff competition and low prices in the past. However, with increasing costs and a need to improve profitability, the industry is shifting towards more realistic premium prices.

Key Takeaways:

  • Norwich Union will increase its car insurance premiums by around 16 percent over the next year.
  • The increase will range from 6 percent for policyholders with a good claims record to 40 percent for high-risk drivers.
  • Norwich Union's parent company Aviva has been under pressure to show growth after Prudential rebuffed a merger approach.
  • The UK motor insurance industry has become increasingly tough over the past few years, with companies fighting for market share.
  • Analysts believe that internet players such as esure may gain market share if major players push up rates significantly.
  • The motor insurance industry is expected to make an overall loss this year, paying out £113 in claims and expenses for every £100 taken in premiums.
  • Norwich Union employs 5,000 people in York, Sheffield, and Leeds, and saw underlying group profits climb 27 percent to £1.7bn last month.

Statistics:

  • £12bn: the size of the UK motor insurance industry.
  • 12 percent: the market share of Norwich Union in the UK motor market.
  • 6 percent: the increase in premiums for policyholders with a good claims record.
  • 40 percent: the increase in premiums for high-risk drivers.
  • £1.7bn: the underlying group profits of Norwich Union last month.
  • 27 percent: the increase in underlying group profits of Norwich Union last month.

*£113: the amount in claims and expenses paid for every £100 in premiums.

Sources:

  • "Norwich Union to raise car insurance premiums by 16 per cent" by Ros Snowdon, Deputy City Editor, Norwich Union.
  • "UK motor insurance industry facing loss, says EMB" by [reference not provided].
  • "Standard & Poor's says insurers will have to raise prices" by [reference not provided].
  • "Aviva's Prudential merger bid rejected" by [reference not provided].