MOTOR INSURANCE DROPS, BUT REMAINS STRONG.

Motor insurance remains a major part of the European insurance sector, even if its share of the total non-life market has dropped to 33% in 1997, compared with 35% in 1992. Turnover in the sector was ECU 73 billion in the EU 15, 1.4% down on the 1996 figure, reflecting a downward trend not in the number of cars on the road, but in the level of insurance premiums, increasingly driven lower by competition. But in some Eastern European markets - notably Poland, Slovakia and Turkey - there was striking growth.

Reduced income is in contrast to the constant rise in the costs of accidents - which consistently exceeds the level of inflation. Rising costs are due in part to higher damage repair costs, themselves often a function of the higher prices of spare parts (particularly in Nordic countries). But they are also due to rising levels of compensation for personal injury - a...