UK Insurance Key Facts. September 2010

Transcription

1 UK Insurance Key Facts September 2010

2 The UK insurance industry is the third largest in the world and the largest in Europe. It is a vital part of the UK economy, managing investments amounting to 24% of the UK s total net worth and contributing the fourth highest corporation tax of any sector. Employing around 275,000 people in the UK alone, the insurance industry is also one of this country s major exporters, with 20% of its net premium income coming from overseas business. This booklet, published annually, gives 2009 facts and figures about UK insurance and its contribution both to the economy and society. 2

3 Insurance in the economy The UK insurance industry: is the largest in Europe and the third largest in the world, accounting for 8% of total worldwide premium income Breakdown of worldwide premium income by country, % 28% 1% 1% 2% 2% 3% 4% 13% 4% 6% 7% 8% United States Japan United Kingdom France Germany Italy China Netherlands Canada South Korea Switzerland Ireland Other employs around 275,000 people. 2 This is almost a third of all financial services jobs, and twice as many as are employed in the combined electricity, gas and water supply sectors is responsible for investments of 1.6 trillion, equivalent to 24% 3 of the UK s total net worth Source: Swiss Re. Sigma No 2/2009. Note that Switzerland and Ireland are not the next largest countries by premium income, but are included because, together with the Netherlands, they have more favourable tax regimes than the UK and as a result are attracting business away from the UK Source: ONS, Economic and Labour Market Review, August 2010 and ABI. End-year This figure includes an estimate of those in auxiliary businesses (brokers, actuarial consultants etc) which is no longer available separately from all financial services Source: ONS, The Blue Book, 2010 edition 3

4 controlled 13.4% of investments in the London stock market in This compares to 12.8% held by company pension funds, 3.5% by banks, 1.8% by unit trusts, and 10.0% by other financial institutions is a major contributor to the UK s tax take. In the 2008/09 tax year ABI members contributed 8.2 billion in taxes, equivalent to 1.6% of total Government tax receipts. Of this, 1.8 billion was 5 Corporation Tax and 1.2 billion was Insurance Premium Tax is a major exporter. One-fifth of its net premium income comes from overseas business. Premium income from overseas is 54 billion, of which 41 billion is long-term business and 13 billion is general business Insurance and its customers In 2009, the UK insurance industry paid out: 173 million per day in pension and life insurance benefits. This includes: million to pensioners and long term savers, of which 30 million was in the form of an annuity - 18 million in death and disability benefits 58 million per day in general insurance claims. This includes: million in private motor car claims - more than one in six private car drivers make a claim each year 4 5 Source: ONS, Share Ownership Survey 2008 Source: ABI Research Paper No. 20, Total Tax Contribution conducted by PwC for the ABI 4

5 - 8.5 million to householders for property damage or the loss of possessions - one in ten householders make a claim each year million to businesses on property damage million in liability claims, such as for accidents at work, professional liability, and injuries to the public on commercial premises Most people buy some kind of insurance. The chart below shows the percentage of households with different types of insurance products, and the average annual expenditure on insurance products by those households. 6 Households buying products and the price they pay each year 7 % 80 2, , , ,500 1, , Contents Motor Buildings Life Mortgage Personal Medical Income Contents Motor Buildings Life Insurance Mortgage Protection Personal PensionsMedicalIncome Protection % of households with insurance (LHS) Average annual household spending on insurance - (RHS) 6 7 Source: National Statistics Crown Copyright The Living Costs and Food Survey is Crown Copyright. Figures relate to 2008, the latest available. This does not include insurance provided by employers (eg medical cover). 5

6 The UK insurance market 934 companies are authorised by the FSA to carry out insurance business in the UK. Of these: 701 carry out general business only (such as motor, household, health and commercial insurance) 190 carry out long-term business only (such as life insurance and pensions) 43 carry out both general and long-term business The ABI represents around 90% of insurance companies operating in the UK. Many companies are owned by larger insurance or financial services groups. The top 10 general insurance groups account for 70% of the business written, while the top 10 life and pensions insurance groups account for 80% of the business written. Premiums and claims General Insurance Business In 2009, total net premiums (written premium less reinsurance premiums paid by the insurer) amounted to 30.5 billion. This breaks down as follows: Motor: 9.9 billion Property: 8.2 billion Accident & Health (Personal Accident and Private Medical Insurance): 4.4 billion 6

7 General Liability: 3.3 billion Miscellaneous & Pecuniary Loss (e.g. Payment Protection, Legal Expenses, other financial loss): 2.7 billion Marine, Aviation & Transport (MAT) and Reinsurance: 1.9 billion Total premium by type of insurance, , nominal values Motor Property Accident & Health General Liability Misc & Pecuniary Loss MAT and Reinsurance Between 1999 and 2009, claims paid have increased by 44%, from 15.4 billion in 1999 to 22.2 billion in In 2009, claims broke down as follows: Motor: 9.4 billion Property: 4.5 billion Accident & Health: 3.3 billion General Liability: 2.3 billion Miscellaneous & Pecuniary Loss: 1.5 billion 7

8 Marine, Aviation & Transport (MAT) and Reinsurance: 1.2 billion Claims by insurance type, and underwriting result, , nominal values bn Motor Accident & Health Misc & Pecuniary Loss General Insurance Underwriting Result Property General Liability MAT and Reinsurance The insurance model relies on claims being predictable. Major events such as the floods of summer 2007 cause variability in claims and underwriting results. 8

9 Long-Term Insurance Business Premiums for life and pensions business were 119 billion for ABI members in 2009, a 9% decrease over Life premiums decreased by 41% and pension premiums increased by 3%. Total premium by type of insurance, , nominal values bn Life insurance Individual Pensions Group Pensions Other Business Payments to policyholders in 2009 amounted to 153 billion, a 15% decrease on This includes: Around 57 billion or 155 million per day paid out in benefits to pensioners and long-term savers Around 6.6 billion or 18 million per day, in death and disability benefits Around 89 billion of transfers of pension funds to other insurers or pension fund managers 9

10 Payments to policyholders, , nominal values bn Life insurance Pensions excl Annuity Payments Pension Annuity Payments Other Business How people buy insurance There are many ways to buy insurance. People s buying habits have changed over the last ten years. In general insurance, the change is most clear for retail sales: the proportion of people buying insurance through brokers has fallen from 52% in 1999 to 37% in In contrast, 13% is now sold by banks and building societies 10 years ago the figure was 5%. 68% of life and pensions business was sold through Independent Financial Advisers in 2009, compared to 58% sold in this way in

11 General Insurance Retail Sales, % 1% 37% 33% 8% 13% Brokers Banks/Building Societies Retailers/Affinity Groups/Utility Groups Company Agents Direct Other Long Term Insurance Sales, % 26% 68% IFAs / Whole of Market Single Tie / Limited Range Non-intermediated 11

12 Investment holdings As at 31 December 2009, the insurance industry had 1,594 billion invested in company shares and other assets on behalf of millions of savers and general insurance customers in the UK and elsewhere. General insurance investments amounted to 109 billion, while long-term investments were 1,496 billion. Invested funds by asset class, % 12% 6% 6% 13% 15% 14% 11% 15% UK public sector securities (including gilts) UK ordinary stocks and shares Overseas ordinary stocks and shares Unit Trusts Cash and other investments Overseas public sector securities Other UK company securities Other overseas company securities Property 12

13 A world-leading industry Insurance helps individuals and businesses protect themselves against the everyday risks they face, enabling people to own homes, travel overseas, provide for a financially secure future and run businesses. Insurance underpins a healthy and prosperous society, enabling businesses and individuals to thrive, safe in the knowledge that problems can be handled and risks carefully managed. The ABI has over 300 members who account for some 90% of premiums in the UK. On behalf of our members, the ABI works with Government, Opposition, regulators, the media and general public to ensure the British insurance industry goes from strength to strength, providing high quality products and services to customers, while continuing to be a global leader and serve the UK economy. Our current priorities are to: Lead the debate and achieve an appropriate outcome on the treatment of insurance as the UK and EU reshape the regulatory architecture following the financial crisis, most importantly in relation to the Solvency II Directive on capital Maintain pressure for a stable, competitive tax regime which helps to promote the UK as an attractive place to do business and maintains the place of the UK as a leading financial centre Work to build trust and tackle detriment to our customers through clear communication, proportional regulation and making the right products available to people that need them at a fair price 13

14 Ensure Government works with industry to deliver a sustainable framework to manage and reduce flood risk so that insurance can remain widely available and affordable after the Statement of Principles expires in 2013 Help tackle under-saving by ensuring the successful introduction of auto-enrolment in 2012, increasing customer awareness of annuities and the benefits of shopping around, as well as promoting the benefits of saving into a pension Develop a simplified advice model for consumers who are unable or unwilling to pay for full financial advice, helping them to access suitable services and products that will meet their needs, especially after the implementation of the Retail Distribution Review reforms in Lead thinking on how risk can be shared between public and private provision, giving people who can afford to protect themselves more options so that they are not as reliant on the state Drive key policy thinking on supporting radical reform of longterm care. Help drive key Government reforms to the personal injury compensation scheme to help road traffic accident victims. Provide leadership in corporate governance, including through advice to institutional investors from the ABI IVIS advisory system. 14

15 Contacts at the ABI Maggie Craig, Acting Director General, Director of Consumer Strategy and Scottish Affairs Rebecca Driver, Director of Research & Chief Economist Huw Evans, Director of Corporate Affairs Joanna Rose, Assistant Director, Statistics Hugh Savill, Acting Director of Investment Affairs Nick Starling, Director of General Insurance & Health Peter Vipond, Director of Financial Regulation & Taxation Helen White, Acting Director of Life & Savings Statistics Helpdesk

16 Association of British Insurers 51 Gresham Street London EC2V 7HQ Tel: Fax: