LONDON--(BUSINESS WIRE)--A.M. Best has a negative outlook on the United Kingdom (U.K.) non-life insurance market. Persistent competitive market conditions, uncertainty related to legislative changes and the potential impact of Brexit on the U.K. economy, create an overall difficult operating environment and earnings are likely to be depressed over the medium term, according to a new briefing.
The Best’s Briefing, “Market Segment Outlook: United Kingdom Non-Life,” states that the sector may benefit from the implementation of the Civil Liability Bill, particularly any changes to whiplash compensation and the way the personal injury discount rate is calculated. But the timing of these reforms is uncertain and insurers may have to pass on savings to policyholders through reduced premium rates in order to remain competitive.
In A.M. Best’s view, insurers that are able to differentiate themselves and build a competitive advantage through more sophisticated use of data and technology will be better positioned to contend with the market’s challenges. In addition, strong risk management standards and a disciplined underwriting approach, which incorporates conservative assumptions in respect of the impact of anticipated legal reforms, will be crucial if insurers are to maintain profitability.
Factors that may lead to A.M. Best revising its U.K. non-life outlook to stable include an improvement in pricing conditions, as well as a stabilisation in the claims and reserving environment, with a corresponding improvement in underwriting performance. In addition, a change in outlook would likely hinge upon the market being able to demonstrate an ability to successfully navigate the forthcoming economic uncertainty and legislative changes.
To access a complimentary copy of this briefing, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=271829.
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