UK non-life insurers show continued financial growth

Written by Adam Cadle

01/10/2024

Solvency II reports from 100 of the largest non-life insurers in the UK and Ireland show continued financial growth in 2023, LCP has revealed.

Its eighth annual review of Solvency II report revealed that the sample’s aggregate eligible own funds ratio increased to 198% as at 31 December 2023, driven by changes to UK insurers’ risk margin calculation, along with underwriting profits and improved investment performance.

Total gross written premium increased by 9% since last year, reaching £142bn by the end of 2023.

Alongside the continued growth, insurers are tackling growing risks and evolving demands in the market. While most insurers mentioned climate change in their Solvency and Financial Condition Reports (SFCRs), very few explicitly discussed the specific risks of physical, liability, and transition separately. One of the more frequently mentioned aspects of climate change was the increased frequency and severity of extreme weather events.

Over two-thirds of the insurers in the sample mentioned geopolitical risk in the SFCRs. Since last year, many insurers have expanded their perspective from the specific impacts of the Russia-Ukraine war to a broader consideration of geopolitical uncertainty.

Inflation remains a key risk for almost all firms, and emerging risks, such as evolving customer needs, technological advancements, data ethics, and challenges in recruitment and retention, remain top priorities for insurers.

LCP has urged insurers to enhance transparency around emerging risks, develop tailored stress testing and scenarios, prepare for upcoming regulatory shifts, and integrate sustainability into risk management, to navigate the current risks.

Katie Garner, senior consultant at LCP, said: “Emerging risks in the insurance market are an ongoing challenge and threaten stability due to their complexity and interconnectedness. As changes occur rapidly, insurers must respond swiftly by implementing innovative risk management strategies and improving their resilience plans to maintain stability.”

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