UK insurance business shows signs of recovery in 2010
- New long-term premium income of the UK insurance sector up 7.7% in first 9 months of 2010
- Overall UK insurance net worldwide premium income down 8.1% in 2009 to £197.6bn
- London Market premium income up by nearly third in 2009 to a record £31.9bn
The UK insurance sector is showing signs of recovery in 2010 according to the Insurance 2010 report by the TheCityUK: the new independent membership body promoting the UK financial and related professional services industry. In the first nine months of 2010 new long-term premium income was up 7.7% on the same period in 2009 although still down by over a quarter on the same period two years earlier.
Growth in 2010 follows two years of decline. Overall net worldwide premium income of the UK insurance industry fell 8.1% in 2009 and a quarter from the peak in 2008 to £197.6bn. This was largely due to a decline in long-term premium income as the economy slowed and demand for long-term insurance products fell. The 8.3% decline in long-term premiums in 2009 was largely due to a 43% fall in life and annuities income and 12% decline in individual pension premiums. This was only partially offset by an 11% increase in occupational pension premiums. General insurance premiums fell 7% in 2009 to £43.8bn. A slight fall in premium income was seen across most general insurance business lines.
Gross premiums on the London Market were conservatively estimated at a record £31.9bn in 2009, up 29% on the previous year. Lloyd's generated 61% of the total, the insurance company market 36% and P&I Clubs the remainder. The insurance company market showed the strongest growth in 2009 with a 43% increase in premium income. The London Market is a key centre for international insurance and reinsurance, particularly for marine and aviation business and reinsurance.
The insurance sector makes an important contribution to the UK economy. It accounts for 1.2% of GDP and provides employment for around 300,000 people including 50,000 in the London Market. Insurance net exports increased 9% in 2009 to a record £8.3bn. Funds under management of UK insurance companies totalled £1.6 trillion, almost double those of any other European country.
Marko Maslakovic, Senior Manager, Economic Research at TheCityUK, said:
"The economic slowdown has shown that the UK insurance sector is sufficiently capitalised. The recovery in credit and equity markets since early 2009 has helped insurance companies' profitability, although this is still not back to pre-crisis levels. Based on the first three quarters, we expect that that premium income of the UK insurance sector will have returned to growth in 2010, albeit below the long-term trend."
