According to a survey by professional services company EY, British house and auto insurers are expected to suffer large losses in 2022 and 2023 as a result of inflationary pressures and low premium rates.
Following the British financial regulator’s pricing regulations in January of this year, which mandate that businesses charge renewing customers the same as new customers, premiums for auto and house insurance have also decreased.
Higher energy, labour, and material costs will have an impact on motor insurers’ claim expenses, while high inflation and a hot, dry summer that resulted in an increase in subsidence claims will have an impact on house insurers.
According to EY’s UK insurance leader Rodney Bonnard, the energy cost problem is likely to cause more houses to be less heated this winter, which might lead to frozen pipes and an increase in damage and repair expenses.
According to EY’s UK Motor and Home Results Analysis, motor insurers are predicted to report a loss-making net combined ratio (NCR) — a metric of profitability in the insurance industry — of 115% this year.