Groupama chief also reports arson is on the increase due to economic downturn.
Groupama Insurances chief executive Francois-Xavier Boisseau has claimed that insurers’ talk of commercial lines rate increases is hot air.
Bossieau also said that the company was witnessing the first signs of the impact of the UK’s economic downturn on claims, with incidence of arson on the rise.
His comments came as the insurer reported profits of £15m for the first half of the year, level with last year’s first half profit.
Revenues were up 4.5% year-on-year to £224.7m, with personal lines growing 9.5%. Healthcare revenues were stable. Commercial lines revenue declined over 1% amid fierce competition.
Boisseau said: “Reports that commercial rates are hardening are not true. The reality is a lot of times an insurer says they have increased prices but this is only for their renewal customers. What we see, especially on commercial liability is very aggressive pricing from insurers to get new business in.”
He added. “There is plenty of talk about rates moving up, at the moment it is really nothing more.”
“Again our schemes business has helped us avoid the worst excesses of the market cycle in commercial insurance. Groupama is not willing to pay a stupid market price on our commercial lines.”
Boisseau warned that although private motor rates were beginning to rise in the market, the increases were not enough to keep up with claims inflation and the impact of credit hire.
He said: “Credit hire remains a continuing issue for the motor market and is contributing significantly to claims inflation that is still outstripping the rating increases that are being applied. Although motor premiums are moving up, the market will need a lot more to begin to return to profitability - so the pace of change needs to quicken.”
Fraud claims were beginning to increase as the economy edged closer towards recession.
Boisseau said: “The incidence of fraud increases when times get tough and we are currently monitoring a year on year increase in arson claims on our property account. It is early days but this appears to be a sign of things to come and another reason why premiums need to move up.”
He added: "We thought that 2008 would be a difficult year and nothing we have seen contradicts that view. Our performance has been very sound because we have the basics right and remained highly focused. Consistent profitability coupled with good customer service is key to success for Groupama."
