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Competitor Profiles of the Top UK Commercial General Insurers
Market Report, July 2005, 3596  €


Description

IntroductionThis report will profile in depth the top UK commercial insurers.
Key market data on each player and their position within the principal lines of commercial business will be examined.
The report will also analyse the strategies of these players in order to build an overall picture of the competitive direction of the commercial insurance market.ScopeKey statistical data on each of the players profiled including GEP, market share and profitability ratiosUnique insight into their business and distribution strategies and intention for the future based on primary researchBenchmarking of the players along a number of key metrics enabling the reader to see which players are performing well and which are underperformingHighlightsNIG's commercial property book has expanded very quickly between 1999 and 2003.
It grew from £26.7 million in 1999 to £163.4 million in 2003, which represents a compound annual growth rate of 57.2 per cent.AXA has reduced its exposure to large fleet business in favor of smaller commercial vehicle accounts in recent years.
Large fleet business was thought to be less profitable than smaller accounts.
As a result, its share of the commercial motor market has decreased from 6.6 per cent in 1999 to 4.2 per cent in 2003.Norwich Union has acquired motoring services group, RAC for £1.1 billion.
This will boost its general insurance business.
Norwich Union will aim to sell additional products to RAC's membership base and change the current product holding of RAC customers from a rate of 13 per cent currently owning more than one product to over 50 per cent.Reasons to PurchaseUnderstand your competitors' strategies so you can better plan your own corporate strategyBenchmark your performance against your competitors in terms of GEP growth, market share and profitabilityUnderstand the lines of business that your competitors are focusing on in order to form a strategic response

Sommaire
 
TABLE OF CONTENTS
 
CHAPTER 1 INTRODUCTION 20
 
What is this report about? 20
 
Who is the target reader? 20
 
How to use this report 20
 
CHAPTER 2 THE UK COMMERCIAL INSURANCE MARKET 21
 
The commercial insurance market has hardened in recent years but some lines are showing signs of softening 21
 
The commercial market grew strongly between 2000 and 2003: however, growth slowed in 2004 21
 
Profitability has improved in the commercial sector 25
 
Some lines of commercial business are softening in 2005 and others are on the verge of softening 26
 
CHAPTER 3 NORWICH UNION 28
 
Company overview 28
 
Norwich Union is part of the Aviva Group 28
 
Norwich Union is the UK’s largest general insurer 30
 
The commercial book 30
 
Norwich Union’s commercial premium income grew faster than personal premium income between 1999 and 2003 30
 
Motor plays a more important role in Norwich Union’s UK portfolio compared to its peers 32
 
Norwich Union’s commercial book has grown slower than the overall market between 1999 and 2003 due to rationalization 34
 
Norwich Union’s commercial property book has grown slower than the market between 1999 and 2003, as it exited its global risks business 34
 
Commercial motor is a good performing business for Norwich Union 34
 
Norwich Union’s pecuniary loss business has grown slower than the overall market between 1999 and 2003 35
 
Norwich Union has reduced its exposure to the liability market 35
 
Group accident and health is a relatively small part of Norwich Union’s commercial book 35
 
Distribution strategy 38
 
Norwich Union generates the majority of its commercial business through brokers 38
 
Corporate partnerships account for a small proportion of the overall commercial book 38
 
Norwich Union may roll out online commercial insurance 38
 
Company strategy 38
 
Norwich Union has set a group combined operating ratio target of 100% in 2005 and 2006 38
 
Norwich Union aims to cut costs and grow revenue through the acquisition of the RAC 39
 
Profitability 40
 
Norwich Unions general insurance profits improved in 2004 due to greater revenue, reduced weather claims and claims cost savings 40
 
Company outlook 42
 
Norwich Union’s group target combined ratio of 100% in 2005 and 2006 is ambitious 42
 
CHAPTER 4 ROYAL & SUNALLIANCE 43
 
Company overview 43
 
R&SA is a global general insurer 43
 
R&SA was created from the merger of Royal Insurance and Sun Alliance in 1996 44
 
The organization of R&SA has changed dramatically in recent years 44
 
The commercial book 44
 
Commercial business accounts for approximately 60 per cent of R&SA’s UK general insurance business 44
 
The structure of R&SA’s commercial portfolio fits closely with the average of the competitors profiled 46
 
R&SA has rationalized its commercial property book 47
 
The gross ratio on R&SA’s liability book reduced significantly in 2003 48
 
R&SA moved from number three to number two in the commercial motor market in 2003 48
 
R&SA’s pecuniary loss combined ratio is poor 48
 
R&SA held top spot in the group accident and health market; however, it has since exited the market 49
 
Distribution strategy 51
 
R&SA targets brokers that give it access to its target market 51
 
R&SA is aiming to develop its commercial direct arm 51
 
Corporate partnerships are not a point of focus for R&SA 51
 
Company strategy 51
 
R&SA is focusing on the profitability of its customers 51
 
R&SA is expanding the range of products it offers to SMEs in a bid to win more SME business 52
 
R&SA is giving its smaller brokers access to more complex products 52
 
R&SA is looking to lower costs by outsourcing to India 53
 
Profitability 53
 
R&SA UK Commercial moved into profitability in 2004 53
 
Company outlook 55
 
R&SA’s focus on reducing costs and its customer profitability programme will help it to improve profits over the long term 55
 
CHAPTER 5 ZURICH FS 56
 
Company overview 56
 
Zurich FS is a global insurer with a large presence in North America 56
 
Zurich FS is the UK’s third largest commercial general insurer 57
 
Zurich’s commercial business is broadly comprised of Zurich UK Commercial, Zurich Global Corporate UK and Zurich Municipal 58
 
The commercial book 58
 
The hardening commercial market has seen commercial business become more important to Zurich’s general insurance portfolio 58
 
Zurich’s largest book of business is general liability 60
 
Zurich dropped to second place in the motor market in 2003 61
 
Zurich’s commercial property book expanded rapidly in 2003 61
 
Zurich has managed to grow its general liability book profitably 62
 
Zurich does not focus on pecuniary loss business 62
 
Distribution strategy 64
 
Zurich deals with international, provincial and small brokers 64
 
Zurich has a small direct book but there are no plans to grow the channel 65
 
Company strategy 65
 
Profitability 65
 
The net income of Zurich’s UKISA division more than doubled in 2004 65
 
Company outlook 67
 
Zurich’s general liability book is its major strength 67
 
CHAPTER 6 AXA 68
 
Company overview 68
 
AXA Group is a largely European insurer 68
 
AXA’s UK division was launched in 1998 68
 
UK commercial insurance generates a large proportion of the Group’s total worldwide general insurance GWP 70
 
AXA UK is comprised of four business units 71
 
The commercial book 72
 
AXA has increased its focus on commercial lines 72
 
AXA’s commercial portfolio is structured heavily towards A&H business 73
 
AXA has reduced its exposure to large fleet business 74
 
AXA is focused on commercial property 75
 
AXA’s group A&H GEP has declined since 2000 due to changes in its business mix; however, GEP rose marginally in 2003 75
 
General liability GEP grew by 13.5 per cent 75
 
AXA is not focusing on pecuniary loss business 76
 
Distribution strategy 78
 
AXA is aiming to grow through multinational and superprovincial brokers 78
 
Corporate partnerships also have a role to play in AXA’s distribution strategy 78
 
Company strategy 78
 
AXA Group adopted a new corporate strategy in 2005 78
 
AXA Insurance was restructured to support the new strategy 79
 
Customer segmentation is a major part of AXA’s strategy 80
 
AXA aims to be number one in the SME sector 80
 
AXA is aiming for a combined ratio of 98 per cent to 102 per cent across the cycle 81
 
Profitability 81
 
AXA’s UK and Ireland general insurance business recorded much improved profits in 2004 81
 
Company outlook 83
 
AXA has made significant progress in its general insurance business; however, it remains to be seen whether it can keep up the good performance 83
 
CHAPTER 7 ALLIANZ CORNHILL 84
 
Company overview 84
 
Allianz Group is a European composite insurer 84
 
Allianz Cornhill’s history dates back to 1905 85
 
UK commercial insurance forms a small part of Allianz Group’s worldwide general insurance operation 86
 
Allianz Cornhill is comprised of three businesses 87
 
The commercial book 88
 
Commercial business dominates Allianz Cornhill’s UK general insurance business 88
 
Allianz Cornhill’s commercial portfolio is led by property and motor insurance 90
 
Allianz Cornhill’s commercial property book achieved a very low gross claims ratio in 2003 91
 
Allianz Cornhill has managed to increase the size and profitability of its commercial motor book 92
 
Allianz Cornhill’s general liability book grew at approximately the same rate as the market between 1999 and 2003 92
 
Distribution strategy 95
 
Allianz Cornhill’s business is largely broker-based 95
 
Allianz Cornhill is aiming to increase business from smaller brokers 95
 
Allianz Cornhill has a number of large corporate partners 96
 
Company strategy 96
 
Allianz Cornhill will continue to be a broad-based insurer 96
 
In order to support its strategy of servicing all elements of the market, it believes it is key to invest in technical skills 96
 
Having local expertise is key to its strategy 97
 
Profitability 98
 
Company outlook 100
 
Allianz Cornhill Commercial’s combined ratio may worsen as the commercial market softens further 100
 
CHAPTER 8 NIG 101
 
Company overview 101
 
NIG is part of the Royal Bank of Scotland Group 101
 
NIG is the eighth largest commercial insurer in the UK 101
 
NIG is split into personal and commercial business 102
 
The commercial book 103
 
NIG has re-weighted its GI business towards commercial lines 103
 
Within its commercial portfolio, property leads 105
 
NIG was the fastest growing player in the top 10 commercial motor insurers in 2003 106
 
The combined ratio on NIG’s general liability book increased in 2003 106
 
Datamonitor estimates that NIG’s commercial pecuniary loss book was worth approximately £20 million in 2003 106
 
Distribution strategy 109
 
NIG is committed to dealing with brokers that want to develop long-term relationships 109
 
Company strategy 110
 
NIG will continue to focus on the SME market 110
 
Profitability 111
 
Profits improved for RBS Insurance in 2004, largely due to growth in premium income 111
 
Company outlook 112
 
CHAPTER 9 COMPARISON OF PLAYERS PROFILED 114
 
All of the players profiled saw commercial insurance increase as a proportion of their overall portfolio 114
 
Corporate strategy 116
 
The strategies of the six players vary widely 116
 
Distribution strategy 117
 
Insurers have mixed attitudes towards the direct channel 117
 
Benchmarking GEP 119
 
Zurich’s liability GEP grew by £500 million between 1999 and 2003 119
 
NIG’s commercial property book grew at a faster rate than the other players over both the short and medium term 120
 
The six insurers have had mixed experiences in the pecuniary loss market 122
 
NIG has been expanding in the commercial motor sector 123
 
All three players saw slow growth in group accident and health in the medium term 125
 
Market share 126
 
Zurich FS has won the most market share in the general liability sector 126
 
Norwich Union’s share of the commercial property market almost halved between 1999 and 2003 127
 
All of the players excluding NIG saw their market share of pecuniary loss decrease 128
 
Zurich FS, Allianz Cornhill and NIG all increased their market share of commercial motor from 1999’s levels 129
 
All of the profiled insurers lost market share in the group accident and health sector, due to the growing dominance of BUPA 129
 
Benchmarking gross claims ratio 130
 
Norwich Union held the lowest public and general liability gross claims ratio in 2003 130
 
All of the players profiled achieved significant improvements in their employers’ liability gross claims ratio as rates hardened 131
 
Performance for commercial vehicle was split, with three players reporting a decrease in their gross claims ratio, while three saw increases 132
 
R&SA was the only insurer to experience a decrease in its fleet gross claims ratio 132
 
Zurich significantly improved its pecuniary loss gross claims ratio in 2003 133
 
Better claims ratios on commercial property across the board, due to benign claims costs and higher rates 134
 
Conclusion 134
 
The six insurers profiled will come up against tougher times as the commercial market softens further 134
 
CHAPTER 10 APPENDIX 136
 
Structure of insurer’s books 136
 
Definitions 138
 
Definitions of general terms 138
 
Commercial general insurance 140
 
Research methodology 143
 
Explanatory notes to competitor tables 143
 
Research sources 148
 
Current publications 148
 
Future publications 148
 
Relevant links 148
 
Do you need more information? 149
 
Datamonitor Financial Services Consulting 149
 
SPP writing team 150
 

 
LIST OF TABLES
 
Table 1: Commercial insurance market GWP, 1999-2004e 22
 
Table 2: Commercial general insurance market premium income and year-on-year growth, split by sector, 1999-2004e 25
 
Table 3: Commercial underwriting result by line of business, 1993-2004e 26
 
Table 4: Norwich Union’s UK general insurance premium split between personal and commercial, 1999-2003 32
 
Table 5: Key statistics relating to Norwich Union, 1999-2003 37
 
Table 6: Operating profit and combined ratio for Norwich Union UK General Insurance business, 2003-4 41
 
Table 7: Combined operating ratio and operating profit by country, Aviva, 2003-4 42
 
Table 8: R&SA’s UK general insurance premium split between personal and commercial, 1999-2003 46
 
Table 9: Key statistics relating to R&SA, 1999-2003 50
 
Table 10: NWP and underwriting result for R&SA UK Commercial, 2003-4 54
 
Table 11: Zurich FS’s UK general insurance premium split between personal and commercial, 1999-2003 60
 
Table 12: Key statistics relating to Zurich FS, 1999-2003 63
 
Table 13: GWP, net income, loss and expense ratio for Zurich UKISA, 2003-4 66
 
Table 14: AXA’s UK general insurance premium split between personal and commercial, 1999-2003 73
 
Table 15: Key statistics relating to AXA, 1999-2003 77
 
Table 16: Gross revenues, net investment result, adjusted earnings for AXA UK & Ireland, 2002-2004 82
 
Table 17: Allianz Cornhill’s UK general insurance premium split between personal and commercial, 1999-2003 90
 
Table 18: Key statistics relating to Allianz Cornhill, 1999-2003 94
 
Table 19: Gross written premium and balance on the technical account, Allianz Cornhill 2003-4 99
 
Table 20: NIG’s UK general insurance premium split between personal and commercial, 1999-2003 104
 
Table 21: Key statistics relating to NIG, 1999-2003 108
 
Table 22: NIG’s commercial office network 109
 
Table 23: Earned premiums, combined ratio and contribution, RBS Insurance, 2003-4 112
 
Table 24: Percentage split of personal and commercial business for the top UK commercial insurers, 2002-3 115
 
Table 25: Liability GEP for players profiled, 1999-2003 120
 
Table 26: Commercial property GEP for players profiled, 1999-2003 121
 
Table 27: Pecuniary loss GEP for players profiled, 1999-2003 123
 
Table 28: Commercial motor GEP for players profiled, 1999-2003 124
 
Table 29: Group A&H GEP for players profiled, 1999-2003 126
 
Table 30: Liability market share by competitor, 1999-2003 127
 
Table 31: Commercial property market share by competitor, 1999-2003 128
 
Table 32: Pecuniary loss market share by competitor, 1999-2003 128
 
Table 33: Commercial motor market share by competitor, 1999-2003 129
 
Table 34: Group A&H market share by competitor, 1999-2003 130
 
Table 35: Gross claims ratio for public and general liability, 1999-2003 131
 
Table 36: Gross claims ratio for employers’ liability, 1999-2003 131
 
Table 37: Gross claims ratio for commercial vehicle, 1999-2003 132
 
Table 38: Gross claims ratio for fleet, 1999-2003 133
 
Table 39: Gross claims ratio for pecuniary loss, 1999-2003 133
 
Table 40: Gross claims ratio for commercial property, 1999-2003 134
 
Table 41: The structure of Norwich Union’s commercial book compared to its peers, 2003 136
 
Table 42: The structure of R&SA’s commercial book compared to its peers, 2003 136
 
Table 43: The structure of Zurich’s commercial book compared to its peers, 2003 137
 
Table 44: The structure of AXA’s commercial book compared to its peers, 2003 137
 
Table 45: The structure of Allianz Cornhill’s commercial book compared to its peers, 2003 138
 
Table 46: The structure of NIG’s commercial book compared to its peers, 2003 138
 
Table 47: Methodology for Datamonitor’s accident & health premium income splits 144
 
Table 48: Methodology for Datamonitor’s property premium income splits 147
 

 

 
LIST OF FIGURES
 
Figure 1: The commercial insurance market has gone through a period of significant hardening since 2000 22
 
Figure 2: The GWP of all commercial lines grew in 2004 24
 
Figure 3: Aviva is predominantly a European long-term savings provider 29
 
Figure 4: Commercial premium income has increased as a proportion of total general insurance premium income 31
 
Figure 5: Norwich Union’s commercial portfolio is weighted more towards motor than its competitors 33
 
Figure 6: Norwich Union’s commercial property and commercial motor book have been the fastest growing lines between 1999 and 2003 36
 
Figure 7: Norwich Union’s UK general insurance profits improved in 2004 41
 
Figure 8: The UK is R&SA’s largest market 43
 
Figure 9: R&SA’s commercial focus has increased between 1999 and 2003 as it exited certain personal lines and commercial rates hardened 45
 
Figure 10: The structure of R&SA’s commercial portfolio is very similar to the average of the competitors profiled 47
 
Figure 11: All of R&SA’s commercial lines of business grew between 1999 and 2003 with the exception of its group A+H business 49
 
Figure 12: The profits of R&SA’s UK Commercial division improved markedly in 2004 54
 
Figure 13: Zurich FS has a big presence in North America 57
 
Figure 14: Commercial insurance has increased as a proportion of Zurich’s overall general insurance portfolio 59
 
Figure 15: Zurich’s liability business is bigger than average 61
 
Figure 16: Zurich has seen healthy growth in its general liability, commercial property and commercial motor books 62
 
Figure 17: Zurich’s business is evenly spread among the international, large, medium and small brokers 64
 
Figure 18: Zurich’s net income increased in 2004 66
 
Figure 19: The UK and Ireland is AXA’s second largest general insurance market 69
 
Figure 20: UK commercial insurance accounts for approximately 12 per cent of AXA’s worldwide general insurance premium income 70
 
Figure 21: AXA UK comprises four business units 71
 
Figure 22: AXA has been re-weighting its portfolio towards commercial insurance between 1999 and 2003 72
 
Figure 23: AXA’s has a much larger market share of group accident and health than its peers 74
 
Figure 24: AXA’s commercial property and general liability business have grown the most between 1999 and 2003 76
 
Figure 25: Profits of AXA’s UK & Ireland general insurance business improved in 2004 82
 
Figure 26: Allianz Group is a European insurer 85
 
Figure 27: UK commercial insurance accounts for approximately four per cent of total worldwide general insurance GWP 86
 
Figure 28: Allianz Cornhill is comprised of three main trading divisions 88
 
Figure 29: Allianz Cornhill’s UK general insurance portfolio is heavily weighted towards commercial business 89
 
Figure 30: Allianz Cornhill has a large presence in pecuniary loss 91
 
Figure 31: All lines of Allianz Cornhill’s commercial business have grown between 1999 and 2003 93
 
Figure 32: Allianz Cornhill distributes most of its commercial business through provincial brokers 95
 
Figure 33: The branch footprint is core to Allianz Cornhill’s commercial lines strategy 98
 
Figure 34: The profits on Allianz Cornhill’s general insurance business rose between 2003 and 2004 99
 
Figure 35: The RBS Group structure 101
 
Figure 36: NIG forms part of RBS Insurance 102
 
Figure 37: NIG is split into personal and commercial lines 103
 
Figure 38: NIG has increased its focus on commercial insurance since 2001 104
 
Figure 39: NIG’s commercial book is property-led 105
 
Figure 40: NIG has achieved rapid growth through a combination of organic expansion and acquisition 107
 
Figure 41: RBS Insurance’s contribution increased in 2004 112
 
Figure 42: All of the players profiled increased their commercial focus in 2003 115
 
Figure 43: Corporate strategy of six players profiled 117
 
Figure 44: Distribution strategies of the top six commercial insurers 118
 
Figure 45: Zurich has seen the greatest increase in the size of its liability book in the medium term 119
 
Figure 46: The hardening market means that all players saw their commercial property book increase between 1999 and 2003 121
 
Figure 47: Three of the six players profiled saw their pecuniary loss GEP increase in 2003, while the remaining three saw a decline 122
 
Figure 48: NIG saw the biggest rate of increase in commercial motor GEP in 2003 124
 
Figure 49: AXA, R&SA and Norwich Union have all seen slow progress in the size of their group accident and health book 125
 

 
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