LONDON (Reuters) - British motor insurers posted the strongest underwriting profits in 23 years last year and 2018 is also likely to be profitable, consultants EY said on Thursday.
Premium increases, a fall in injury claims and the release of cash reserves pushed the net combined ratio to 96.8 percent in 2017, its best showing since 1994, EY said in a statement.
A level below 100 percent indicates an underwriting profit. UK motor insurers had a combined ratio of 109.4 percent in 2016, EY said.
After a government reversal on changes to the so-called Ogden rate used to calculate lump-sum compensation payments for personal injury claims, insurers were able to release reserves they had set aside for higher claims.
EY sees the net combined ratio at 97.7 percent this year.
“Despite rates beginning to fall in the market, business written during 2017 will continue to perform well, and further reserve releases are possible,” it said.
The average comprehensive motor policy cost 481 pounds ($635.64) in 2017, up 9 percent from a year earlier, according to the Association of British Insurers.
EY analyzed results from 31 companies which together make up about 90 percent of the UK motor market, in terms of gross written premium.
Reporting by Carolyn Cohn; editing by David Evans