Fundamentals such as underwriting and pricing key to surviving in the market
An area of common pain for insurers right now is that of claims inflation.
Thatcham data suggests the cost of motor claims is going up by about 10% annually at the moment. “That has a consequence for our prices, and we can definitely see the market hardening in fleet and in the property classes,” Allianz UK chief executive Jon Dye told Insurance Times. “That’s just a necessary reaction to what we are seeing in the market,” he added, insisting that the response should be appropriate pricing and underwriting.
“All the investment we’ve made in training our team and building their skills and relationships with brokers, that puts us in a positive place in our commercial business. But it’s not an easy place to trade.
“For all the technology in the world, it’s important that the insurance fundamentals don’t go away. If you’re not underwriting and pricing properly or handling your claims accurately then you are not going to prosper in this market.
“The loss ratio is the big element in everyone’s results. Those investments we’ve made in insurance fundamentals enables us to trade in the way we trade.
Office closures
Meanwhile, Dye defended a proposal to close two offices and relocate mainly underwriting staff to different locations.
Dye said the closure of its Woking and Luton offices and redeployment of 75 people affirms its strategy of bringing underwriters and developers face to face with brokers.
“We have to keep looking at where those markets are,” Dye said, adding that conversations with some of the brokers affected had already taken place.
“We remain committed to our local relationships. Our branch network is important to us. Feedback I’ve received so far is that they absolutely understand [the decision].”
He said the brokers have had “brilliant relationships” with the Allianz teams in Luton and Woking. “We need to replicate that in Birmingham and Maidstone and Southampton [the offices set to grow].
Dye also provided an update on the LV= portfolio transfers, which are close to denouement, with car and home policies moving in three weeks, and commercial business to Allianz finalised in four months’ time.
“That’s a really big portfolio transfer and the feedback from the market has been as positive as you could expect it to be. The brokers who are being relocated within the Allianz network should have some confidence because we are at the tail end of doing something substantial that has landed pretty well,” he said.
In terms of new products to keep the brokers interested, Dye cited a construction proposition which has been live for about a year which has started to gain traction.
Dye was also upbeat about the company’s broker propositions, with two recently launched offerings gaining traction, including products for the construction and renewable energy sectors. In the general commercial sector, Allianz also offers a mini-fleet proposition, which has also been available for a year, Dye said, explaining that it was “a very important part of our LV proposition. We didn’t have standalone taxi or truck products before,” he pointed out.
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