The recent announcement that Allianz Insurance and Liverpool Victoria have created a joint venture creating the UK’s third largest general insurer should be greeted with cautious optimism in my opinion. German-based Allianz will buy an initial 49 per cent stake in LV’s general insurance business, which will rise to 70 per cent in 2019. Allianz has announced that this decision signals their intention to mount an assault on the UK’s personal lines insurance market and that the increase scale combined with LV’s mutual brand will make them a powerful competitor. All I see is two insurance companies becoming one, effectively removing one element of competition and in the long term forcing price increases for the insurance buying public. I suspect that we will see an initial reduction in pricing as Allianz flex their new more powerful financial muscles and as other insurers react to protect market-share, however in the long-term a reduction in insurance company numbers can only mean a reduction in competition and an increase in pricing. The number of insurers operating in the personal lines sector has been steadily decreasing over the last ten years. There is no doubt that some of the catastrophic weather events in recent years have forced some smaller insurers out-of-the-market and the recent announcements regarding the change to long-term personal injury payments has done similar. The resulting outcome means less choice for the consumer, less competition for the insurers and dare I say it less a drop in service standards from the insurance companies.
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