Division to develop non-personal injury business for post-Laspo world
Allianz Insurance plans to develop a non-personal injury business in its legal expenses insurance unit and replace its before-the-event (BTE) offering.
The insurer is making the changes to the Allianz Legal Protection (ALP) business in response to the introduction of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (Laspo), which came into force in April.
ALP has been profitable. Its gross written premium increased 44% in 2012 and it reported a combined operating ratio (COR) of 87.1%. However, Laspo is expected to slash the sale of after-the-event (ATE) insurance for personal injury – a product that has been partly responsible for ALP’s growth.
Allianz Insurance will develop its ATE capabilities in areas such as commercial and will replace and grow its BTE offering in target markets.
The company aims to capitalise on the “huge opportunity to develop civil litigation and legal services propositions”, according to chief executive Andrew Torrance.
Torrance said: “We know there is demand in these areas and we are in discussion with various companies regarding potential offerings.”
He added: “I am very confident about ALP’s future and I draw this confidence from looking at the financials and the people within that business.
“ALP’s financial performance in 2012 and in the first quarter of this year, where we grew the GWP ahead of prior year, shows that the business is in a good place financially and this will remain the case for the foreseeable future because of the nature of the existing business model.”
“I also base my confidence on the quality of the people at ALP and their knowledge of the market, which means that the plans for the future of the business are well founded and will be executed flawlessly.”
Allianz announced its plans for ALP along with its first quarter 2013 results. Operating profit was up 34% to £46.8m (Q1 2012: £34.9m) and the COR improved by 1.9 percentage points to 95.2% (Q1 2012: 97.1%).
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