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GIRO XXX
2003 Convention
14-17 October 2003
City Hall, Cardiff
S:\06 Professional Bodies\Institute of Actuaries\Seminars-Conferences\GIRO XXX Cardiff\JC-European Motor Ins Market.ppt
European Motor
 Market summaries
 Products
 Distribution
 Size
 Profitability
 Current issues
S:\06 Professional Bodies\Institute of Actuaries\Seminars-Conferences\GIRO XXX Cardiff\JC-European Motor Ins Market.ppt
Market – Products (UK)
 Two Basic Product Systems
 Comprehensive / Non-comprehensive
 TPL / Own Damage / Fire & Theft sold separately
 Sale of add-ons increasing
 Increasing number of rating factors
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Distribution
Method
UK
Germany
France
Spain
Italy
Ireland
Broker
50%
10%
15%
25%
5%
25%
Tied
Agents
15%
70%
75%
65%
85%
50%
Direct
20%
5%
5%
5%
Banks /
Other
15%
15%
5%
5%
10%
25%
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S:\06 Professional Bodies\Institute of Actuaries\Seminars-Conferences\GIRO XXX Cardiff\JC-European Motor Ins Market.ppt
Distribution
 UK heavily broker & direct
 Direct increasing in all other countries
 Continentals dominated by tied agents
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S:\06 Professional Bodies\Institute of Actuaries\Seminars-Conferences\GIRO XXX Cardiff\JC-European Motor Ins Market.ppt
Market Statistics
2002 European Motor Market (bns Euros)
1.9
UK
16.4
19.5
Germany
France
Spain
9.7
21.7
16.3
Italy
Ireland
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S:\06 Professional Bodies\Institute of Actuaries\Seminars-Conferences\GIRO XXX Cardiff\JC-European Motor Ins Market.ppt
Market Statistics - Premium Growth 1998-2002
Written Premiums by Country
25
Eur ($mil)
20
UK
Ge rmany
France
Spain
Italy
Ire land
15
10
5
0
1998
1999
2000
2001
Accident Year
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S:\06 Professional Bodies\Institute of Actuaries\Seminars-Conferences\GIRO XXX Cardiff\JC-European Motor Ins Market.ppt
Market Statistics - Premium Growth 1998-2002
Growth
19982002
GWP
1998
GWP
2002
UK
10.4
16.4
58%
12%
Germany
19.9
21.7
9%
2%
France
13.9
16.3
17%
4%
Spain
4.4
9.7
120%
22%
Italy
14.4
19.5
36%
8%
Ireland
1.0
1.7
80%
16%
Country
Annual
Growth
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Market Statistics – Gross Written Premium
 Italy has surprisingly high written premium
 Ireland and Spain high growth
 UK and Italy have shown significant growth
 France and Germany are flat
 How does this feed into loss ratios?
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Market Statistics - Loss Ratios 1998 to 2002
Loss Ratios by Country
120%
110%
100%
Germany
90%
Ireland
Spain
France
UK
Italy
80%
70%
60%
1998
1999
2000
2001
2002
Accident Year
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Market Statistics - Loss Ratios 1998-2002
Country
UK
Germany
France
Spain
Italy
Ireland
Effective
Loss Ratio Loss Ratio
Rate
1998
2002
Increase
93%
97%
78%
90%
87%
98%
73%
96%
77%
82%
71%
87%
26%
1%
1%
10%
22%
12%
Average
Annual
Rate
Increase
6%
0%
0%
2%
5%
3%
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S:\06 Professional Bodies\Institute of Actuaries\Seminars-Conferences\GIRO XXX Cardiff\JC-European Motor Ins Market.ppt
Market Statistics – Loss Ratios
 Italy and UK show biggest improvement in
loss ratios
 Ireland and Spain loss ratios are surprisingly
high given premium increases
 France and Germany are flat mirroring
premium
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Market Concentration
Country
UK
Germany
France
Spain
Italy
Ireland
Top 5
51%
30%
43%
45%
32%
77%
Top 10
73%
45%
64%
65%
50%
99%
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Market Concentration
 Germany least concentrated and poor performance
 Irish loss ratio surprisingly high given market
concentration
 France very stable
 No significant cross-border trade
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Current Issues – Europe-wide






Historic lack of profitability
Improving road safety
New markets ?
Claims process improvement
Harmonisation
Reduced investment income
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S:\06 Professional Bodies\Institute of Actuaries\Seminars-Conferences\GIRO XXX Cardiff\JC-European Motor Ins Market.ppt
Current Issues
 United Kingdom
 Increasing social inflation
 Claw-back of state costs
 Maintaining profitability
 Germany
 Possible anti-selection between old and new rating
systems
 Limited data for new rating factors
 Loss-leading
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S:\06 Professional Bodies\Institute of Actuaries\Seminars-Conferences\GIRO XXX Cardiff\JC-European Motor Ins Market.ppt
Current Issues
 France
 Low churn rate
 Companies declining risks rather than raising
premiums
 Spain
 Problems with motor-cycles
 Scope for improving road infra-structure and safety
 Maintaining profitability
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Current Issues
 Italy
 Market rates starting to soften
 Claims frequency has reduced
 Penalty points system introduced July 2003
 Ireland
 Penalty points system introduced Nov 2002
 Historically high claim inflation but steps to control
 Political reform
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Finish !!!
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S:\06 Professional Bodies\Institute of Actuaries\Seminars-Conferences\GIRO XXX Cardiff\JC-European Motor Ins Market.ppt