RSA cuts ties with 800 personal motor brokers

RSA is severing ties with 800 motor brokers after a business review concluded it would not be able to make a sustainable profit from them.

The insurer is telling brokers about its plans this morning and said the withdrawal would be completed by the end of the year.

RSA said it would continue to offer motor insurance through personal lines brokers where the book was balanced by a profitable home insurance portfolio.

“There are few areas that are tougher to trade in than UK motor,” RSA’s personal lines intermediated division managing director Mark Allan told Insurance Times.

“It hasn’t performed well for us and we’re not prepared to write business where we can’t make sustainable returns.”

The cuts, part of a group-wide business review, represent 35% of the personal motor brokers RSA deals with.

For some of the affected brokers RSA is the sole underwriter and for others it is one of a number of insurers on a panel.

“We’ll work carefully with our brokers to make sure there’s a smooth handover to whoever their new provider is and support customers through that change,” Allan said.

RSA made a 111.7% combined operating ratio in its personal motor book last year, a 10.9 point deterioration on its 2012 results, and a £40m underwriting loss.

Allan said the business from personal motor brokers was one of the contributory factors as the distribution channel is particularly price sensitive.

“In other parts of our business there might be reasons why it’s not purely driven by rates, such as access to data or distinct distribution channels,” he said.

Allan said RSA was interested in partnerships with brokers and affinity schemes where it could make a sustainable return across the portfolio.

“If that means motor runs less profitability than home, we’d look at that in the round,” he added.

RSA would also focus and invest more in growing its home, pet, and private client businesses with brokers and affinity partners, Allan said.

Job losses

The cuts mean that RSA will make 40 roles redundant from its Manchester and Belfast personal broker sales and services teams. Allan said RSA would try to find alternative arrangements for the staff affected in coming months.

RSA has previously cut back its presence in the direct motor market by closing its aggregator-only brand eChoice and ending its arrangement with Ford.

Its position as one of three insurers on the panel of telematics broker Ingenie is not affected by the move.