General and professional indemnity insurance rates set to rise

This coming renewal season, UK consumers are being faced with major rate hikes across the board to nearly all insurance premiums, from general and life insurance to more specialised cover such as professional indemnity insurance, according to both RSA and Aviva, two of the biggest insurance providers in Britain.

Aviva, which is the largest insurer in the UK, recently announced that it will be imposing increases to its premiums to many of its insurance lines, such as car insurance, home insurance, and business insurance.

Aviva UK’s head of general insurance, David McMillian, said in a recent statement that there have been no surprises this year that premiums have continually gone up, based on the inflation in the personal injury and business liability insurance markets; in fact Mr McMillan stated that it was a wonder that the relevant rates hadn’t risen more quickly than they have.

Mr McMillan also stated that since there is no sign of any kind of reduction of the inflation, he expected the market trending to persist in the immediate future.

In comparison, RSA has raised its rates on several of its insurance products, including a 4 per cent hike for home insurance cover and a 13 per cent car insurance policy rate increase.  RSA justified the increases by stating that they have changed rates in the past, and will continue to do so in the future, based on necessity.

While in previous years, many insurance companies had relied on a reduction in premiums in order to be competitive in their markets, insurance rates have begun to rise once again to what many insurance industry experts refer to a more standard level, mostly driven by a marked increase in the costs incurred by more frequent claims being made.

Most insurance companies have reported strong earnings, however, including Aviva, which increased its half-year returns by 6 per cent to £9.50 a share.  Aviva also announced that its profit margins increased by 21 per cent, raising to a total of £1.27 billion.

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