Five insurers dominate U.K. non-life market, A.M. Best finds

The United Kingdom non-life insurance market is dominated by Aviva, Royal Bank of Scotland (RBS), Royal & SunAlliance, AXA and Zurich, an A.M. Best special report finds.
The U.K. is the third largest non-life market in the world.
In highly commoditized lines, such as personal motor and household insurance, [we believe] larger companies are able to leverage economies of scale to gain a competitive advantage, A.M. Best Co. said in a release. However, opportunities remain for smaller, niche insurers, which can compete on service and, to some extent, are insulated from price-led competition.
A.M. Best goes on to predict that further rate reductions are expected this year in the U.K. non-life insurance market, although the reductions would come at a slow pace.
The ratings agency also observed that underwriting performance will be less cyclical in 2007 because of increasing focus on profitability versus volume-based performance by insurers.
Insurers are implementing more stringent underwriting guidelines that should moderate rate decreases, A.M. Best said. In addition, better risk management capabilities and access to tools such as stochastic models are improving the analysis of historic claims data and aggregate exposures, facilitating more accurate pricing.
A.M. Best expects that insurers will increase their focus on expense savings, which will be tough in a weak rating environment.