Vitality is the latest UK insurer to exit the motor insurance market due to soaring claims costs after RSA left the market in March 2023. If this trend continues, the leading players will become stronger and are likely to face less pricing pressure from challengers. Competition in the market will fall as a result, with negative impacts on consumers.

GlobalData’s 2022 UK Insurance Consumer Survey found that Vitality had a negligent share of UK motor insurance, after only entering the market in 2021. RSA was also not a major player in the UK motor insurance space with shares of 0.5% in 2021 and 0.4% in 2022. However, it is a big name in the insurance industry, and the provider ultimately decided it was better off exiting this market to protect its overall combined operating ratio.  

That both a large global insurer and one that is trusted by consumers in other lines (health) ended up leaving the motor insurance market is a worrying trend. The moves emphasise just how hard it is to enter the UK motor insurance space in the current climate.

The third-largest player in the UK motor insurance market (with a share of 8.3% in 2022), Direct Line has taken an alternative route. It has launched a motor ownership app called Caha. The purpose of this app is to help customers manage and store all of their driving paperwork in one place. It also has features such as finding parking spaces. This is potentially a way to increase retention rates and attract new customers by making the overall proposition stronger. It is hard for insurers to cut premiums at present amid such high claims inflation, so looking at other ways they can strengthen their proposition and add value appears a sensible strategy. Overall, the bigger players look set to increase their dominance over the UK motor insurance market. They have more capability to withstand this difficult period, and possibly even offer customers extra benefits such as Direct Line is beginning to do. As a result, we expect to see more providers with smaller shares of the market cut their losses, following RSA’s and Vitality’s lead.

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