Household rates must rise more, says Ageas

Action is still needed on household rates against a higher incidence of adverse weather conditions, according to Ageas UK chief executive Barry Smith.

However, Smith said current commercial rates may be the “new norm” and companies will have to adapt to lower pricing levels rather than expect rates to harden.

Ageas UK’s household gross written premium (GWP) fell 9.5% to £74.4m in the first quarter of 2012, from £82.2m in the same period last year, as the company raised rates.

This improved the household combined operating (COR) ratio to 111.5% in Q1 2012 from 121.9% in Q1 2011. However, while the ratio has improved, Smith acknowledged there is still work to be done.

“More action needs to be taken,” he said. “We are still seeing a higher incidence of weather and we believe that has to be reflected in the rates. If that means we lose some market share, then so be it.”

Ageas’s motor book continued to improve, falling to 95.5% in Q1 2012 from 97.3% in Q1 2011.

However, while total Q1 2012 COR of 104.1% was an improvement over the full-year 2011 ratio of 108.5%, it is slightly worse than 2011’s 103.1% Q1 figure.

Insurance bosses have been calling for commercial rate rises, without much success. Smith said: “I hear what everybody is saying. We have to make an assumption that we are where we are and there is no such thing as a soft market. It may be that prices are not at the levels they were before, but perhaps this is the new norm.”

Ageas’s overall profit before tax was £22m in the first quarter of 2012, up almost six-fold on the £3.8m in the same period last year. Total non-life COR was 102.3% (Q1 2011: 106%).