Daily briefing: Wednesday - It's only words

Joe Plumeri presents himself as a bit of a wise guy in the relatively straight-laced world of insurance, and this was fairly apparent from the Willis president’s remarks at yesterday’s presentation to analysts.

When quizzed on the departures of his erstwhile lieutenants Brendan McManus and David Margrett, Plumeri said they were “simply a couple of people who left the company”. The casual dismissal of two such key individuals will grate on this side of the Atlantic.

The throwaway nature of the comments compound the impression created by Willis’s decision to bury the news of McManus’s departure to a footnote in a press release issued last week. Plumeri’s remarks will certainly dispel any doubts about who calls the shots in the Willis empire.

As for acquisitions, insurance brokers does not appear to be at the top of Willis’s shopping list, judging by group president Graham Millwater’s comments at the same analysts’ presentation. He instead highlighted employee benefits as an area of expansion.

Standing by Equity Red Star

Mike Wilkins is a man of few words, as Insurance Times discovered in a recent interview with the IAG chief executive. But this morning Wilkins had to submit himself to a public grilling when the Australian insurer held its annual general meeting.

But it was comments by Wilkins’ chairman Brian Schwartz that will be of greatest interest to the UK market. He identified restoring the profitability of IAG’s UK business Equity Red star as one of its priorities.

Saying this is one thing but doing it is another. IAG’s most recent results, which were for the year ending 30 June,  revealed that its UK losses had been nearly slashed in half to A$181m (£115.3m) compared to Equity’s ‘annus horribilis’ in 2010.

The same results showed that IAG UK’s combined ratio was also heading in the right direction, down to 135.6% from 166.6%. Giving further room for confidence were the figures showing that just one third of these A$181m losses were recorded in the second half of the financial year.

IAG’s stewardship of Equity, given how tempting it must have been to walk away from the UK motor market’s biggest basket case, has won the company respect at Lloyd’s.

But the improvements over the last year have been achieved against a backdrop of rising motor rates. These rate rises now look set to be going into reverse, with AA’s most recent quarterly survey showing that third-party fire and theft rates were up in the three months to 30 September 2011 by the narrowest of margins: 0.1%. IAG’s commitment to its troubled UK arm is creditworthy, but getting back to profitability in what remains a notoriously difficult motor market could prove an increasingly uphill struggle.

Public don’t want referral fees

And finally, Insurance Times has reported new figures today showing that support from consumers for retaining referral fees is practically negligible, or 1.1% to be precise. The figures are a slap in the face for those who defend the controversial practice on the grounds that it gives accident victims access to justice. The poll should steel the Ministry of Justice ministers as they prepare to introduce legislation, which could be published as early next week, to outlaw referral fees.