In this episode of AM BestTV, Catherine Thomas, senior director of analytics, AM Best, discusses the rating agencys negative market segment outlook on the U.K. non-life sector, citing the need for improvements in technical performance and developments in regulatory and political issues. Click on http://www.ambest.com/v.asp?v=uknonlife319 to view the entire program.
Thomas discussed how Brexit is putting pressure on the sector.
All U.K. insurers will be affected by any economic fallout associated with Brexit. That is likely to have negative implications for their investment earnings, claims inflation, as well as premium volumes. Additionally, once the United Kingdom leaves the European Union and at the end of any transition period, the passporting rights that currently exist between the United Kingdom and the European Economic Association will cease to exist, she said.
Other factors behind the negative outlook include additional regulation.
U.K. non-life insurers are contending with increased regulatory scrutiny of their pricing practices by the Financial Conduct Authority, said Thomas. Although recent legislative changes introduced as part of the Civil Liability Act should be a positive for U.K. insurers, AM Best expects the majority of the benefits to be passed on to policyholders.
Looking forward, Thomas said she believed AM Bests negative outlook on the sector could be revised if there is improvement in technical performance underpinned with better technical pricing, as well as a positive impact on legislative reforms and a reduction in economic uncertainty.
To access a copy of this market segment report, titled, Market Segment Outlook: United Kingdom Non-Life, visit http://www3.ambest.com/bestweek/purchase.asp?record_code=284061.
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