.. to suffer from the Euro crisis. Clients are nervous, rating agencies are on high alert – could telematics be the only good news story for the coming months?
Take a deep breath: the outlook for 2012 is gloomy on several fronts. As Ben Dyson reports today, the Eurozone crisis has barely begun in terms of its impact on insurers’ balance sheets. Aon Benfield is now receiving more calls from clients about the Euro crisis than anything else – and they’re right to be worried. European politicians have yet to reach any solution, and the ratings agencies are therefore increasingly jittery about insurers’ exposure to sovereign debt.
S&P has 15 top European insurers, including Allianz, Aviva and AXA, on a negative credit watch. Groupama’s recent experience is a stark demonstration of the ratings agencies’ power – and experts predict that it will not be the only European insurer to mull a fire-sale of its UK assets this year.
Add to this the latest CBI/PwC report on the financial services sector, and things are beginning to look very bad indeed. The report finds only marginal growth in premium and business volumes at the end of last year, and says the hope for recovery rests on an improvement in the commercial market.
But with exposures shrinking and insurers still chasing each other down on rate, what chance is there of that? The report’s warning of job cuts sounds all too accurate. Aviva’s closure of its Irish branch network and subsequent scrapping of 950 jobs this year look like a sign of things to come.
It seems like the only good news these days comes from personal lines, where profit is more than just a pipe dream and insurers are fighting it out on innovation. Telematics will be one of the biggest stories of the year ahead, with the AA among the many insurers preparing to launch products. Sam Barker examines what’s on offer across the market.
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