End of the road: Why More Than will no longer sell car insurance as insurer RSA quits market
RSA has set out its plans to exit the car insurance business in the face of “extremely competitive” market conditions.
In a statement, RSA said it had struck an agreement to “introduce” car insurance customers held through its More Than business to UK rival Swinton, with a view to boosting its business, home and pet insurance lines.
In explaining its exit from the market, RSA indicated it lacks “sufficient scale” to drive “sustainable outperformance” in the personal motor insurance sector.
The market exit follows the £7.2bn acquisition of RSA by Canadian insurer Intact Financial Corporation’s acquisition and Danish insurer Tryg in June 2021.
RSA was formed through the merger of Sun Alliance and Royal Insurance in 1996.
Its exit from the motor comes as UK car insurers have suffered in recent years in the face of fast-paced inflation, new Financial Conduct Authority (FCA) rules banning ‘price walking,’ and the rise of price comparison websites.
This “perfect storm” of headwinds in turn saw UK insurers hike car insurance premiums by a record 21.1 per cent from February 2021 to 2022, new research from Consumer Intelligence shows.
Inflation and supply chain disruption have pushed up the costs insurers face in fixing and replacing customers cars.
FCA regulations, introduced in January 2022, that block insurers from charging more to loyal customers, have also hit insurance company balance sheets and caused premiums to rise.
Insurers have also struggled to remain profitable, as price comparison website have driven fierce competition in the sector.
Insurers efforts to retain their margins saw UK drivers hit with annual average insurance costs of £929, with premiums having risen 6.7 per cent in the past three months alone.
The record price hikes saw London drivers’ insurance premiums surge 26.3 per cent, to average annual sums of £1,419.