RSA and Direct Line have posted positive H1 2020 results despite COVID-19, due to them being active in the personal lines markets. The two insurers have fared relatively well thanks to them having much of their business in motor and household lines.
Direct Line reported that its motor claims had dropped by 70% during the COVID-19 pandemic’s peak, while RSA saw its underwriting profit improve by 33% in H1 2020.
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GlobalData’s 2019 UK Insurance Consumer Survey found that Direct Line is the third largest motor insurer in the UK in terms of policies sold, with a share of 8.1% of the market. Similarly, our UK Top 20 General Insurance Competitor Analytics ranked it as the leading insurer in terms of gross written premium in 2018, with RSA ranked in eighth.
Furthermore, GlobalData statistics show that Direct Line had 50.3% of its UK premiums in private motor insurance in 2018. RSA only had 11.0%, but it had 25.9% in private household, 22.8% in commercial motor, and 12.8% in commercial property. This means it is also less impacted by the business lines worst hit by COVID-19, including life insurance and business interruption insurance.
It is clear that insurers with a higher reliance on home insurance and especially motor premiums will fare better in the short term. With working from home being more common than ever, individuals who do so are more likely to spot potential dangers around the house early, such as leaks, and less likely to drive to work, keeping down claims in both of these segments. The severe lockdown period in H1 meant that people rarely drove anywhere, which has caused the significant reduction in claims.
However, while insurers in these lines will see the benefits in 2020, there is a significant longer-term risk. People have become used to working from home, and many will continue doing so for the duration of the pandemic and beyond. This means that motor and potentially even home insurers will almost certainly see renewal rates drop. People who no longer need to drive to work may see no need to own a car anymore and may seek to avoid all the costs associated with it. H1 results show that there is a way forward from COVID-19 and the opportunity needs to be grasped.
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