The CBI carried out a Bodily Injuries Thematic Review for accident years 2012 – 2014 in relation to private motor, employer liability and public liability and has recently published a report on its findings together with a number of general observations.
The CBI will follow up on issues identified with individual firms. It outlines changing trends in relation to claims in the non-life sector including a rise in the number of private motor injury claims, a fall in settlement rates and a higher average cost per claim. It also highlights considerable disparity between companies’ reserving practices, with some firms holding half the level per vehicle in comparison to others in the market. The CBI has also set out its assumptions on the impact which legislation introducing Periodic Payment Orders (PPOs) is likely to have on insurers’ reserves, together with actions firms should take in preparation for their introduction (i.e., scenario testing and producing a central estimate). The need for insurers to account for market changes in their pricing assumptions and strategy to ensure risk is adequately provided for is also highlighted.
Whilst the report acknowledges the many challenges currently faced by non-life insurance companies (such as increasing court awards and the proposed legislative changes), the CBI hopes its comments will encourage firms to review and test current reserving and pricing practices in light of the changing market.
A link to the report is here.