RSA is pushing ahead with its shift towards commercial lines in the UK as it completed the purchase of Direct Line’s brokered commercial lines operations in September 2023. This follows RSA’s exit from personal motor insurance in March 2023, amid rumours it will sell its entire personal lines portfolio later this year.

GlobalData’s 2022UK SME Insurance Survey found that in the commercial space, Direct Line is strongest within motor lines. It features in the top five market shares for two of the 16 commercial insurance products GlobalData asks about single van insurance (3.6%) and van fleet insurance (3.9%). RSA did not feature in the top five for any motor products, so this purchase immediately made RSA a much larger player in the commercial motor market.

The move from personal to commercial lines appears to be a solid strategy in the current climate. Insurers in the personal lines space are struggling to make a profit. Motor insurance has seen premiums rise by record amounts throughout 2023 amid significant claims inflation. As a result, insurers have been struggling to keep premiums competitive. Meanwhile, in the household insurance market, the total amount of premiums and the number of contracts both declined in 2022. There is a slightly different picture in the commercial market; although commercial motor saw a very small decline in 2022 (-0.3%) in terms of premiums, commercial property grew by 18.5%.

As consumers are continually being squeezed by the cost-of-living crisis, personal line products are becoming harder to make a profit on. While it has not been an easy period for businesses either, some lines (such as commercial property) have continued to grow sharply. RSA repositioning as a commercial insurance specialist therefore appears to be a coherent strategy based on the difficulties many insurers are having within personal lines.

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