Insurer plans 35% to 40% commercial property rate increasesby Jason Woolfe
Allianz Cornhill will be looking for large rate increases on commercial property risks this year, general manager Andrew Torrance told Insurance Times.
Torrance is targeting mid-market commercial property and liability risks to help drive profitability this year.
The company revealed pre-tax operating profits of £59.3m for 2001, up from a loss of £31.4m the year before, as reported in last week's Insurance Times.
Cornhill is the largest part of parent Allianz's UK operation, which is listed as the country's sixth biggest general insurance group in the November 2001 Insurance Times and Standard and Poor's survey,
Torrance said: "We are certainly expecting to see continued improvement in the profitability of the business in 2002.
"It's going to come from continued improvement in performance on the global risk business and improvement in performance in what I would call mid-market commercial property and liability business in the UK."
Those lines of business had failed to trade satisfactorily last year and he aimed to push up the quality of both books of business.
The time had come to raise rates for commercial property risks, he said.
Increases would vary according to the size of the risk, but small packages of cover would be in the "low double digits".
Torrance said: "The sky's the limit for the very biggest. On the big commercial risks we're looking for 35% to 40%."
Liability business had produced "unsatisfactory" results last year because of industry-wide trends for rising claims, he added.
Torrance admitted that even with significant rate increases, Cornhill would not make an underwriting profit on liability risks.
"Getting into underwriting profit on liability isn't a realistic objective to have in the near term, but we do want to get back to a situation on the liability lines where we're profitable once investment return is taken into account."
But he warned that insurers would have to pass costs on to brokers.
He expected premiums to rise rapidly in the medium term, particularly for classes of business including liabilities.
Torrance described 2000 as a "miserable year" due to high flood claims in the UK and losses from global risks.
Strong 2001 performances from Cornhill's motor book were "very pleasing" and he was "reasonably comfortable" with the current risk portfolio, having pulled out of motorcycles and tour operators.
