'Personal lines are propping up results'

Insurers have fared well in the half-year results to date, with most of the big players posting combined operating ratios under 100% and profits nudging upwards. Significant success stories come from Zurich, which has reaped the benefit of its slash ’n’ burn policy on private motor, and RBSI, which has turned a staggering loss into a healthy profit. Also pleased will be Aviva, with the lowest COR of the big players, vindicating the long game it’s been playing for the past few years, and RSA, where profitable personal lines have propped up a less healthy commercial result.

It’s a very different story in the Lloyd’s market, where one of the heaviest catastrophe years on record has pushed otherwise robust insurers such as Hiscox and Beazley into multimillion-pound losses. That’s the nature of Lloyd’s business, though, and Hiscox can take comfort from the success of its diversified operation in the UK regions.

But the return to profitability outside Lloyd’s comes from the hardening of the personal lines market, not from profitable underwriting in commercial lines. While RSA’s experience clearly shows this, it’s far from alone. Zurich told of average rate rises of 18% in personal lines, compared with 3% in commercial lines. Again, this experience is reflected across the market. So, a solid start to the year – but let’s not forget the need for a return to sanity in commercial pricing.

• Corporate risks are high on the radar for brokers and insurers alike. As SMEs feel the squeeze, mid-corps are looking a safer bet, particularly as changing legislation makes them more open to the value of specialist advice and risk management. But the insurance market never learns and here, as in SME, significant over-capacity has been created as enthusiastic new entrants slug it out with the tenacious old guard for market share. In this month’s edition of the Knowledge, Liz Bury assesses the outlook for change.