Table of Contents
Executive Summary........................................................................... 2
Timing the turn..........................................................................................................................2
Finity ................................................................................................... 5
Finity Consulting – who are they? .............................................................................................5
Tomorrow: What’s in store? ............................................................. 6
The next three years – timing the turn ......................................................................................6
Projection approach outlined ....................................................................................................6
How did we fare in 2008?.........................................................................................................8
Two simple and logical drivers for top-line................................................................................9
Loss ratios in sync with top-line drivers ..................................................................................10
2009 to 2011...........................................................................................................................15
Scenario analysis.....................................................................................................................17
The crisis, the recession, the insurance industry (Finity)............. 20
Synopsis ................................................................................................................................20
Impact on insurer balance sheets ...........................................................................................20
Impact on the claims line ........................................................................................................21
Impact on strategy and operations .........................................................................................22
What to look forward to ..........................................................................................................22
Regulatory prognosis ..............................................................................................................23
Insight into claims trends (Finity) .................................................. 24
Introduction and main observations........................................................................................24
Flood claims – It’s raining, and insurers are paying, but are they charging? ...........................26
Personal lines – Motor ............................................................................................................29
Personal lines – Householders................................................................................................31
Compulsory third party............................................................................................................35
Lenders mortgage insurance (LMI) .........................................................................................38
Professional indemnity / Directors & officers..........................................................................41
Liability ...................................................................................................................................44
Today: GI snapshot (Finity)............................................................. 46
Introduction............................................................................................................................46
Overview of recent experience and future prospects.............................................................47
Industry focus by type of insurer ............................................................................................48
Industry focus by class of business ........................................................................................54
Yesterday: The past 30 years.......................................................... 56
Overview................................................................................................................................56
Premium growth over time.....................................................................................................56
Profitability changes over time................................................................................................58
Reserving and capital over time..............................................................................................62
Implications for listed sector.......................................................... 63
Patiently waiting for cyclical turn to translate into earnings momentum.................................63
Valuation and risks ..................................................................................................................64
Sector summary and running the numbers.............................................................................66
Appendices....................................................................................... 70