Price war fears quashed

Posted :13-12-2004

Datamonitor has played down fears raised by Norwich Union that huge losses could be ensued by the UK motor industry if current trends continue.

In 1998, the motor insurance industry reported losses of £1.5 billion. Andy Keane, Norwich Union's underwriting manager, stated in Post Magazine that continued cheap motor insurance could cause a price war and a repeat of the late 1990s trends.

However, market researcher Datamonitor is confident that the nature of the industry has stabilised dramatically since the 1990s and that the industry is not at risk of a renewed price war.

For instance, the top ten motor insurers now account for 70 per cent of the industry compared with 50 per cent in 1994. Datamonitor also states that these key players are now much more determined to avoid a price war.

Although Mr Keane warned that huge losses are possible, he also told Post Magazine that they are avoidable.

"By writing quality business for added value, not volume, [insurers] can help increase premium stability and avert a price war," he said.
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