‘Real opportunity’ in dual pricing ban for MCE, says bike broker boss

The FCA crackdown on dual pricing practices it set to benefit the likes of motorcycle insurance provider MCE, chief executive Julian Edwards told Insurance Times.

The FCA published its final report into pricing practices in September. One of the measures it proposes is stopping insurers charging more at renewal than the new business price.

Edwards said his company had never participated in dual pricing practices, so the crackdown was “great news”.

”We see some real opportunity with the ban on dual pricing,” he said.

”It’s a real silver lining for that cloud. It’s going to benefit insurers with the lowest expense ratios.”

He said MCE could not currently compete with areas of the motorcycle portfolio such as older riders with a higher no claims bonus paying a £50-£60 premium.

”The pressure’s going to be on making money at new business level, so we’re forecasting those premiums to go up 25%, which gets into our sweet spot. There’s a real opportunity.” 

The company also announced it had appointed DAC Beachcroft to handle its £40m credit hire, fraud and catastrophic injury claims portfolio.

Service issues

Edwards admitted there had been some challenges for policyholders accessing the company’s services lately, but this was due to a change in its CRM platform, which went live a week ago.

He said the changeover went ”pretty well, but when you change your entire platform there are service issues”. He added that these would be resolved over the coming week.

“You dont change platforms and the next day expect to the ‘business as usual’. We’re not an Aviva. We don’t have that kind of resource available. It’s a lot of hard work to get ourselves into a position where we’re at,” he said.

On the impact that Covid has had on the business, Edwards said the UK motor market is resilient to fluctuations in demand. MCE’s distribution is exclusively through price comparison sites, so volumes had not reduced during the lockdown, but claims frequency had. 

But responding to the perception that insurers would make “oodles of money” during the lockdown, Edwards said “insurance doesn’t work like that”.

”Three to four affected months over an underwriting period gets ironed out pretty quickly with other cyclial events that happen.” 

Commenting on the appointment of DAC Beachcroft, Edwards said the law firm’s ”expert knowledge and experience of defending injury claims, coupled with its in-depth understanding of MCE’s strategy, made it a clear choice to become our legal advisor on claims”.

“Our respective teams have now completed a successful integration and DAC Beachcroft is working with a delegated authority.”

Business performance

The business “has never looked so strong”, Edwards told Insurance Times, with EBITDA expected to be in the £23m range this year and a strong solvency position.

In its results ended December 2019, the company posted a profit before tax of £4m, according to Companies House. In its previous reporting period, which ended in May 2019, the company posted a £7m profit.

Edwards, and his father Michael who set up the business in 1975, paid themselves over £9m in dividends in 2019, according to Companies House filings. 

MCE operates from Northamptonshire and Gibraltar, and provides van, car, and fleet as well as bike insurance.

It was ranked 35 in Insurance Times’ Top 50 Brokers survey released last month.