The motor industry is on course to make a profit in 2009 for the first time in 14 years.
2009 could finally see the motor insurance industry make a profit after 14 consecutive years of losses according to a report by independent market analyst Datamonitor.
They project that while motor insurance firms will continue to make losses this year, the sector as a whole should expect to see profits of up to £30million in the next.
Andrew Haslip, author of the Datamonitor report commented: "2009 could be a historic year for the private motor insurance market, putting an end to a painful 14 consecutive years of losses.
Despite motor insurance being a necessity for those that drive, it is not a profitable product for those in the industry. This is simply because consumers base their decision as to who they insure their vehicles with almost wholly on price, making competition for business fierce.
As a result, many insurance companies have been forced to run their motor insurance products at a loss so as to remain competitive, subsidising this area of their business with funds from other profitable areas such as home insurance. This is largely necessary because, until now, payable claims have continually outweighed the revenue made on premiums.
In 2009, Datamonitor project that the situation will change to see premiums rise faster than claims for the first time in 14 years.
Current predictions by the AA see car insurance premiums rising by approximately 6% in 2008 with a potentially greater increase in 2009.
However, in their report Datamonitor do add that this profitability will be short lived and forecast a return to losses in the motor insurance industry in 2010 as an ever increasing number of consumers take advantage of the convenience of online comparison services and shop around to get a better deal.
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