Few things have demonstrated the City’s regard for general insurance quite as starkly as the behaviour of Aviva’s share price following the news that Mark Hodges would take over in the wake of Igal Mayer’s departure. It barely flickered. While brokers were rolling in the fountains like Spanish football fans on World Cup final night, traders and analysts registered the news with a stifled yawn before shrugging it off as ‘market neutral’. General insurance is rarely a top priority in the wider financial sector, which can make for some interesting dynamics in the upper echelons of the UK’s financial giants. Insurance Times asked me to profile the bosses of the three biggest insurers – and those bosses’ bosses, to find out who’s really pulling the strings.
Thanks to the efforts of motor manufacturers and insurers, it is now virtually impossible to steal a car without the keys. So car thieves have started burgling houses and nicking the keys instead. In 2008/09, the Home Office says that 19,400 cars were stolen after car key burglaries, or 53 a day. One particularly impressive new skill is slipping a fishing rod through the letterbox and lifting the keys from a hall table or convenient hook by the front door. According to the insurers I spoke to for this article, car crime is now taking place on “an industrial scale”. But they also admit that they have no idea if it’s a genuine increase – or if their new systems are only now revealing the full picture.
We’ve had floods, freezes, fears of vandalism, fire brigade cuts and an epidemic of cannabis factories… but still the market for commercial property insurance refuses to harden while claims costs climb. But in this piece for Insurance Times, I discovered that for insurers, the worst may be yet to come. As the property underwriting manager for Zurich told me: “There’s too much capacity, and it’s hard to know what will change that, unless there is a major catastrophe.”
What will austerity mean for the North-South divide? Previous recessions have made it worse, hitting the industrial North and Midlands harder and leaving their recovery – if it ever comes – lagging behind the white-collar South East. According to the economists and brokers I spoke to for this Insurance Times piece, it’s a much more mixed picture this time, even if it’s still not looking good for poor Hull…
The coldest winter in 30 years just cost insurers a further £650m, hitting balance sheets already reeling from a string of extreme-weather-related losses. The vast majority of property damage claims related to homes – 60,200 claims out of 66,600 – so it’s not surprising that insurers are putting up prices for household insurance, raising policy excesses and, in some cases, pulling cover from the most vulnerable areas. Some, like AXA, have been open about it, saying premium levels are no longer sustainable. Its rate rises will be concentrated in the most exposed postcodes, for people over 50 who are most likely to be away at the coldest times of the year, and for second homes and buy-to-let properties. Others are more cagey: Aviva is investing in ultra-precise flood mapping technology to determine, for example, which houses within a postcode are at the bottom of the hill. But its spokesman was adamant that it won’t use this information to give higher quotes to vulnerable homeowners, only to offer better prices to the safer ones. Hmm…
If there was a person you really, really wanted to impress, would you leave it to someone you barely knew to answer their calls? That’s the question insurers have been wrestling with as they review their claims outsourcing arrangements and realise they may be losing customers or missing opportunities to detect fraud. Outsourcing appears to be on the decline – only 5% of insurers questioned by Ernst & Young think it will continue to be a major trend. More foresee the rise of “in-sourcing”, even though it can cost insurers tens of millions of pounds to return to answering calls themselves. Something else I learnt while researching the piece: insurance claimants overwhelmingly prefer to speak to Geordies.
Ask brokers or insurers what SMEs want and they’ll generally tell you it’s value for money, great service and the swift processing of claims – all things they pride themselves on already. But ask the SMEs themselves and, while they do want all those things (who doesn’t?), they also have other requirements the industry either doesn’t seem to have picked up on, or for which it hasn’t found an easily marketable answer. Can big business ever really sell the services SMEs want? I investigated insurers’ attempts to produce standard policies that satisfy everyone.