There’s good new and bad new for the motor insurance market this week.
The bad news (as exclusively predicted by Bankstone News in a previous edition) is that interfering busybodies the (so-called) Office of Fair Trading (OFT) are referring the market to the Competitors’ Companion.
The good news is that – as OFT boss Clive Maximum put it this week – “there is no quick fix” and a CC investigation will take at least two years to carry out!
Until those CC geese come home to roast, insurance firms can continue taking full advantage of their money-no-object cervically resilient clients and/or the mysteriously plummeting motor insurance rates flagged up this week when comparisoneers Monkeysupermarket reported that motor insurance premiums have fallen by more than 10% in the past year.
Of course, if motor underwriting for fun and profit is not an option, there’s always ancillary income. This was, coincidentally, a topic touched upon in passing by Jonny Numan of Stockbrokers Brewer & Dolphin quoted this week in This is Money! warning his clients not to touch the Direct Lime float with a barge pole.
“I don’t see motor insurance as terribly profitable,” he tossed off with casual dismissiveness. “It’s very easy to get into,” he told the paper, explaining that there are no longer any “barriers to entry” in the motor market – aside, presumably, from common sense.
Motor insurers rely heavily on something called “ancillary income” he revealed. But now this ancillary income is apparently under threat from “regulatory pressure”. Could be something for Bankstone News to follow up in future editions…
“I do not at present see anything especially attractive in Direct Line,” Numan drawled laconically, judging that the best chance of wringing some kind of profit out of this enforced sell-off of state-owned assets was for institutional investors to say lots of cruel and disparaging things about what a disaster the flotation is going to be and thus make RBS drop its valuation. Then there might be some quick gains to be made when DLG bounces a bit post-flotation.
Oh well…
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