Why do premiums rise?
For insurance companies 1993 and 1994 were vintage years in terms of underwriting profit. It was the first time since the end of the 1979 that premiums exceeded claims. Every bottom line profit in the intervening years had been contributed by investment income. Since 1994, (the peak of profits for this decade,) every year since has seen a diminishing return and profits slid with the market to the bottom of the cycle. In the last 5 years insurance companies have made losses. The reasons for a decline since the middle of the last decade are numerous, but one thing is obvious there are less players now available to brokers and less insurance companies vying for those all important market shares. Competition for market share can be seen as one reason for the decline in insurance company premiums. The beating down of prices did no favours to insurance companies nor did it do anything for consumers, who now feel aggrieved at the sharp increase in premiums. If you compare premiums to the unre
