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http://news.independent.co.uk/business/news/article1222854.ece
What a bunch of *****.
Motor insurance premiums to soar
Norwich Union lifts rates by up to 40 per cent and urges other car insurers to follow suit
By James Daley
Published: 31 August 2006
Britain's motorists are likely to see a sharp rise in the cost of their car insurance after Norwich Union, the market's second largest provider, raised its rates by as much as 40 per cent and urged the rest of the industry to follow suit.
On average, NU motor premiums will rise by 16 per cent when customers next come to renew their policies, the company said yesterday. But premiums for higher-risk groups, such as young male drivers, will shoot up by as much as 40 per cent. The company hopes the move will put an end to the recent price war in the market.
Patrick Snowball, the head of Aviva's UK operations, which include Norwich Union, said the company was no longer willing to carry on writing loss-making business, and hoped the rest of the industry would follow its lead, rather than continue to offer cut-price policies.
"We are determined to lead the market on this and we would expect some sensible discipline in the market," he said. "The pendulum has swung too far and rates have been too low - we have to act to ensure our business is profitable. We are prepared to sacrifice volume to achieve this."
Mr Snowball said the company was giving away too much to its customers and not enough to its shareholders, claiming the balance needed to be redressed.
Royal Bank of Scotland, the UK's largest motor insurer via its Direct Line and Churchill brands, gave a cautious welcome to Aviva's pricing decision but would not be drawn on whether it intended to follow suit. Annette Court, RBS Insurance's chief executive, said: "We agree that prices are unsustainable at the current level, given the rate of claims inflation and that prices need to rise."
Like most motor insurers, NU has found the cost of its motor insurance claims and expenses is more than the premiums it is collecting each year. Its Combined Operating Ratio - a key measure of insurers' profitability - deteriorated from 102 to 105 per cent during the first six months of the year. Any figure above 100 represents a loss.
Although the group has still managed to make an overall profit on the motor business, with the help of strong investment returns, Mr Snowball said the company was not willing to continue sustaining a negative underwriting result. He said all motor insurers had suffered in recent years, as the cost of claims - particularly personal injury compensation - had rocketed. Premiums have not risen at the same pace.
The AA, which runs a quarterly index monitoring motor premiums, said rates had remained almost static over the past year. Its managing director Kevin Sinclair said claims inflation had already exceeded premium income by 9 per cent this year.
Aviva's bold move will grate against Norwich Union's upbeat "Quote me happy" advertising campaign, which depicts rapturous drivers jumping for joy when they discover how much they can save on their motor insurance with NU. If its competitors do not follow suit, the move will leave NU among the most expensive providers in the industry.
However, as well as unveiling the new sharp rate rises, the company launched a new "no-frills" motor policy yesterday - Simple Cover - to help drivers keep down the cost of their cover in return for forfeiting certain benefits, such as personal accident cover and courtesy cars.
NU's competitors hit out at the launch, claiming it would be a negative development if the market began to cut out policy essentials to keep costs down. Colin Batabyal, esure's director of underwriting, said: "With no courtesy car as standard, limited call-centre opening hours, premium rate phone numbers, the inability to pay monthly, and fundamental exclusions such as cover for driving other cars, motorists should question whether Simple Cover is, in fact, just too simple."
Britain's motorists are likely to see a sharp rise in the cost of their car insurance after Norwich Union, the market's second largest provider, raised its rates by as much as 40 per cent and urged the rest of the industry to follow suit.
On average, NU motor premiums will rise by 16 per cent when customers next come to renew their policies, the company said yesterday. But premiums for higher-risk groups, such as young male drivers, will shoot up by as much as 40 per cent. The company hopes the move will put an end to the recent price war in the market.
Patrick Snowball, the head of Aviva's UK operations, which include Norwich Union, said the company was no longer willing to carry on writing loss-making business, and hoped the rest of the industry would follow its lead, rather than continue to offer cut-price policies.
"We are determined to lead the market on this and we would expect some sensible discipline in the market," he said. "The pendulum has swung too far and rates have been too low - we have to act to ensure our business is profitable. We are prepared to sacrifice volume to achieve this."
Mr Snowball said the company was giving away too much to its customers and not enough to its shareholders, claiming the balance needed to be redressed.
Royal Bank of Scotland, the UK's largest motor insurer via its Direct Line and Churchill brands, gave a cautious welcome to Aviva's pricing decision but would not be drawn on whether it intended to follow suit. Annette Court, RBS Insurance's chief executive, said: "We agree that prices are unsustainable at the current level, given the rate of claims inflation and that prices need to rise."
Like most motor insurers, NU has found the cost of its motor insurance claims and expenses is more than the premiums it is collecting each year. Its Combined Operating Ratio - a key measure of insurers' profitability - deteriorated from 102 to 105 per cent during the first six months of the year. Any figure above 100 represents a loss.
Although the group has still managed to make an overall profit on the motor business, with the help of strong investment returns, Mr Snowball said the company was not willing to continue sustaining a negative underwriting result. He said all motor insurers had suffered in recent years, as the cost of claims - particularly personal injury compensation - had rocketed. Premiums have not risen at the same pace.
The AA, which runs a quarterly index monitoring motor premiums, said rates had remained almost static over the past year. Its managing director Kevin Sinclair said claims inflation had already exceeded premium income by 9 per cent this year.
Aviva's bold move will grate against Norwich Union's upbeat "Quote me happy" advertising campaign, which depicts rapturous drivers jumping for joy when they discover how much they can save on their motor insurance with NU. If its competitors do not follow suit, the move will leave NU among the most expensive providers in the industry.
However, as well as unveiling the new sharp rate rises, the company launched a new "no-frills" motor policy yesterday - Simple Cover - to help drivers keep down the cost of their cover in return for forfeiting certain benefits, such as personal accident cover and courtesy cars.
NU's competitors hit out at the launch, claiming it would be a negative development if the market began to cut out policy essentials to keep costs down. Colin Batabyal, esure's director of underwriting, said: "With no courtesy car as standard, limited call-centre opening hours, premium rate phone numbers, the inability to pay monthly, and fundamental exclusions such as cover for driving other cars, motorists should question whether Simple Cover is, in fact, just too simple."
What a bunch of *****.
Motor insurance premiums to soar
Norwich Union lifts rates by up to 40 per cent and urges other car insurers to follow suit
By James Daley
Published: 31 August 2006
Britain's motorists are likely to see a sharp rise in the cost of their car insurance after Norwich Union, the market's second largest provider, raised its rates by as much as 40 per cent and urged the rest of the industry to follow suit.
On average, NU motor premiums will rise by 16 per cent when customers next come to renew their policies, the company said yesterday. But premiums for higher-risk groups, such as young male drivers, will shoot up by as much as 40 per cent. The company hopes the move will put an end to the recent price war in the market.
Patrick Snowball, the head of Aviva's UK operations, which include Norwich Union, said the company was no longer willing to carry on writing loss-making business, and hoped the rest of the industry would follow its lead, rather than continue to offer cut-price policies.
"We are determined to lead the market on this and we would expect some sensible discipline in the market," he said. "The pendulum has swung too far and rates have been too low - we have to act to ensure our business is profitable. We are prepared to sacrifice volume to achieve this."
Mr Snowball said the company was giving away too much to its customers and not enough to its shareholders, claiming the balance needed to be redressed.
Royal Bank of Scotland, the UK's largest motor insurer via its Direct Line and Churchill brands, gave a cautious welcome to Aviva's pricing decision but would not be drawn on whether it intended to follow suit. Annette Court, RBS Insurance's chief executive, said: "We agree that prices are unsustainable at the current level, given the rate of claims inflation and that prices need to rise."
Like most motor insurers, NU has found the cost of its motor insurance claims and expenses is more than the premiums it is collecting each year. Its Combined Operating Ratio - a key measure of insurers' profitability - deteriorated from 102 to 105 per cent during the first six months of the year. Any figure above 100 represents a loss.
Although the group has still managed to make an overall profit on the motor business, with the help of strong investment returns, Mr Snowball said the company was not willing to continue sustaining a negative underwriting result. He said all motor insurers had suffered in recent years, as the cost of claims - particularly personal injury compensation - had rocketed. Premiums have not risen at the same pace.
The AA, which runs a quarterly index monitoring motor premiums, said rates had remained almost static over the past year. Its managing director Kevin Sinclair said claims inflation had already exceeded premium income by 9 per cent this year.
Aviva's bold move will grate against Norwich Union's upbeat "Quote me happy" advertising campaign, which depicts rapturous drivers jumping for joy when they discover how much they can save on their motor insurance with NU. If its competitors do not follow suit, the move will leave NU among the most expensive providers in the industry.
However, as well as unveiling the new sharp rate rises, the company launched a new "no-frills" motor policy yesterday - Simple Cover - to help drivers keep down the cost of their cover in return for forfeiting certain benefits, such as personal accident cover and courtesy cars.
NU's competitors hit out at the launch, claiming it would be a negative development if the market began to cut out policy essentials to keep costs down. Colin Batabyal, esure's director of underwriting, said: "With no courtesy car as standard, limited call-centre opening hours, premium rate phone numbers, the inability to pay monthly, and fundamental exclusions such as cover for driving other cars, motorists should question whether Simple Cover is, in fact, just too simple."
Britain's motorists are likely to see a sharp rise in the cost of their car insurance after Norwich Union, the market's second largest provider, raised its rates by as much as 40 per cent and urged the rest of the industry to follow suit.
On average, NU motor premiums will rise by 16 per cent when customers next come to renew their policies, the company said yesterday. But premiums for higher-risk groups, such as young male drivers, will shoot up by as much as 40 per cent. The company hopes the move will put an end to the recent price war in the market.
Patrick Snowball, the head of Aviva's UK operations, which include Norwich Union, said the company was no longer willing to carry on writing loss-making business, and hoped the rest of the industry would follow its lead, rather than continue to offer cut-price policies.
"We are determined to lead the market on this and we would expect some sensible discipline in the market," he said. "The pendulum has swung too far and rates have been too low - we have to act to ensure our business is profitable. We are prepared to sacrifice volume to achieve this."
Mr Snowball said the company was giving away too much to its customers and not enough to its shareholders, claiming the balance needed to be redressed.
Royal Bank of Scotland, the UK's largest motor insurer via its Direct Line and Churchill brands, gave a cautious welcome to Aviva's pricing decision but would not be drawn on whether it intended to follow suit. Annette Court, RBS Insurance's chief executive, said: "We agree that prices are unsustainable at the current level, given the rate of claims inflation and that prices need to rise."
Like most motor insurers, NU has found the cost of its motor insurance claims and expenses is more than the premiums it is collecting each year. Its Combined Operating Ratio - a key measure of insurers' profitability - deteriorated from 102 to 105 per cent during the first six months of the year. Any figure above 100 represents a loss.
Although the group has still managed to make an overall profit on the motor business, with the help of strong investment returns, Mr Snowball said the company was not willing to continue sustaining a negative underwriting result. He said all motor insurers had suffered in recent years, as the cost of claims - particularly personal injury compensation - had rocketed. Premiums have not risen at the same pace.
The AA, which runs a quarterly index monitoring motor premiums, said rates had remained almost static over the past year. Its managing director Kevin Sinclair said claims inflation had already exceeded premium income by 9 per cent this year.
Aviva's bold move will grate against Norwich Union's upbeat "Quote me happy" advertising campaign, which depicts rapturous drivers jumping for joy when they discover how much they can save on their motor insurance with NU. If its competitors do not follow suit, the move will leave NU among the most expensive providers in the industry.
However, as well as unveiling the new sharp rate rises, the company launched a new "no-frills" motor policy yesterday - Simple Cover - to help drivers keep down the cost of their cover in return for forfeiting certain benefits, such as personal accident cover and courtesy cars.
NU's competitors hit out at the launch, claiming it would be a negative development if the market began to cut out policy essentials to keep costs down. Colin Batabyal, esure's director of underwriting, said: "With no courtesy car as standard, limited call-centre opening hours, premium rate phone numbers, the inability to pay monthly, and fundamental exclusions such as cover for driving other cars, motorists should question whether Simple Cover is, in fact, just too simple."
