Despite lower claims frequencies, however, motor liability remains unprofitable as higher court awards for bodily injury claims have offset this positive development. The combined ratio for this line is expected to have improved last year but still hovers somewhere around 110.

“Reinsurers are imposing significant rate increases ranging from 20-to-30 percent for motor liability, and some capacity providers are only selectively writing French motor liability risk,” the report said.

The story is much the same in Germany, where pricing discipline continues to wane in the overall p-c market. “Industrial clients now are putting pressure on property premiums following excellent results due to high premium levels and a benign claims environment,” the report stated.

In Germany, however, the p-c industry maintained an overall combined ratio of 92, which leaves “additional pricing flexibility German non-life insurers,” the report stated.

German auto competition is gaining momentum. Best said the combined ratio in this line is rising to 98 in 2006 from 95 last year. Price-conscious consumers with new choices from low cost providers using direct or online distribution methods have helped fuel this new pricing environment.

In the Italian market, pricing discipline is being maintained despite excellent underwriting results in the past three years. Significant auto rate increases to make up for past losses are being maintained.

“The low insurance penetration in other lines of business, such as property, also have offered very good prospects and contributed to a strong increase in premiums,” according to the report.