Having failed to make a combined operating profit since 1994, the future is looking increasingly grim for the £10bn UK motor insurance market. The sector expected rates to fall as a result of the regulatory changes ushered in by the introduction of the Legal Aid, Sentencing and Punishment of Offenders Act in April - but a sharper-than-expected drop has shocked the market, with many questioning whether the LASPO effect has caused insurers to put the chicken before the egg when it came to anticipating likely rate falls.
Motor insurers' over-eagerness to reap the anticipated benefits of the Legal Aid, Sentencing and Punishment of Offenders Act has resulted in a sharp drop in rates. With unprofitability increasing, where does the sector go from here?
Post's article investigates.