Motor insurance news

Cheap car insurance company extends coinsurance agreement

UK car insurance company Admiral Group has extended its coinsurance agreement with Great Lakes Reinsurance, as well as sealing contracts with two other reinsurance companies.

At present, Great Lakes Reinsurance underwrites 65% of motor insurance policies taken out with Admiral. Under the new deal, this will be reduced by 5% per year until 2011, at which time it will remain at 40%.

The two other reinsurance companies that will be underwriting the remainder of Admiral's car insurance business are Swiss Reinsurance and Partner Re.

Swiss Re will be covering 10% of UK car insurance premiums for Admiral, whilst Partner Re will take 7.5%. However, Swiss Re will be able to choose to extend their cover further in 2010 and 2011.

There has been speculation as to how long the current climate of cheap car insurance is going to last but consumers can rest easy, at least for a while. The tactic taken by Admiral suggests that they are not necessarily expecting 2007 to 2008 to be all that profitable.

Despite Norwich Union's 2006 16% hike in car insurance quotes, Admiral will be watching the pricing strategy used by the Royal Bank of Scotland (RBS) when determining its own motor insurance quotes. RBS is one of the leading UK motor insurance firms, owning the cheap car insurance companies Direct Line and Churchill Insurance.

The chief executive of Admiral, Henry Engelhardt, said: "The real key is RBS. They have a 35% market share. They said that they would raise rates in line with claims inflation but even if they raise rates by 5% per year it might improve conditions."

 

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