Released on = April 16, 2007, 1:51 am

Press Release Author = Bharat Book Bureau

Industry = Marketing

Press Release Summary = This Market Review examines the UK insurance market and the
industry that provides it with insurance products.

Press Release Body = Insurance Industry - Market Review

This Market Review examines the UK insurance market and the industry that provides
it with insurance products. The industry is experiencing a challenging period in
2005, with growing regulation, weakening premium rates and uncertainty in the
financial markets.

Key Note estimates that the UK insurance market was worth £126.51bn in 2004. This
represents a 2.9% increase on 2003 but is still lower than the market\'s value in
2002. There are two broad sectors: long-term insurance and general insurance.
Long-term insurance accounted for an estimated 73.2% of the market in 2004, but the
sector\'s value has fallen by 1.8% since 2001, whereas sales of general insurance
have grown by 20.1%.

The industry is under immense pressure to cut its costs. Regulation by organisations
such as the Financial Services Authority (FSA) and the EU is increasing, and this is
undoubtedly adding to the industry\'s cost base. At the same time, premium rates have
been softening as insurers have undercut each other\'s prices in order to win
business. How long this situation will continue is debatable, given that many in the
industry believe that premium rates need to rise in order to make up for growth in
the cost of claims. There is inevitably some concern about profitability in the
industry.

Particular attention is being paid to long-term insurance, since this sector
accounts for the majority of sales. Changes in the rules governing the sale of
insurance (as laid down by the FSA) have opened up new channels of distribution,
with the result that insurance companies have increased their number of outlets.
However, the big problem for the industry is that people are not saving enough. In
October 2005, the Pensions Commission will deliver its recommendations on how to
address the so-called pensions gap, i.e. the difference between the amount consumers
need to save for their retirement and the amount they are actually saving. The
Commission may recommend some element of compulsion in personal pensions.

Key Note forecasts that the UK insurance market will grow by between 3.3% and 3.7%
each year between 2005 and 2009. Unless consumer behaviour changes dramatically or
the Government makes personal pensions compulsory, sales of general insurance are
likely to continue to grow faster than sales of long-term insurance.

Key Note Market Reviews
Focusing on the bigger picture, Key Note Market Reviews are designed to inform you
of developments and opportunities across entire industry sectors.

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