Quinn's car crash and RBSI's Q1 upturn – what it all means for motor
Quinn’s horribly battered image just keeps on taking a pounding. Today we learn that Quinns motor book pricing was "far less sophisticated" than other insurers of its size, according to administrator Grant Thornton.
Quinn also had no in-house actuary for several years.
None of this will come as a surprise to many in the market, who for years said that Quinn was heading for a car crash.
Once again, the all too obvious has happened: Quinn’s strategy was simply to pull in as much premium as possible and then dump the money on the stock market.
Financial penalty
But when the music stopped and the party was brought to a halt by the financial crash in 2008, Quinn found itself with a bad hangover.
No longer could it rely on investment income; instead there had to be some kind of underwriting profit – but that wasn’t there.
Taking all this aside, and to be fair to Quinn Insurance, there’s a good chance that the insurer would still be running today in all its lines in the UK if the insurance arm had not been used to guarantee other parts of the group.
It’s all academic now. The joint project of Liberty, Anglo Irish and Quinn will have to decide what to do with the only line of the UK business left – the motor book – by the end of 2012.
My guess is that Liberty, which has upped the stakes in motor recently by increasing capacity, will retain the book. If not, I expect there’ll be plenty jousting for the renewal book rights.
RBSI bounces back
At last, there's very positive news for RBSI, which reported an operating profit in the first quarter. Chief executive Paul Geddes and his team have worked tirelessly to turn around the biggest player in personal lines insurance, so credit where it is due.
But it does raise an important point: what would have happened if RBSI had been allowed to collapse?
It might have sucked out capacity from the motor market and allowed insurers to be more progressive in their rate increases, benefiting the customer in the long run.
The effects of governments propping up businesses are insidious. It must never be allowed to happen again. We live in a free market, not a free for all.
Saxon East is assistant editor, news.
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