Quinn no longer the low-cost insurer

For a long time, UK brokers’ suspicions over Quinn Insurance’s disarmingly low prices led them to place business elsewhere.

But this week, the group’s US owner, Liberty Insurance, announced it would raise the Irish insurer’s rates and scrap unprofitable areas of commercial lines business. The group has already ceased commercial lines business in the UK and now only operates the motor arm of its business on the mainland.

The move bears out many brokers’ concerns over the company’s pricing policies, highlighting responsible business practices and demonstrating an understanding of what a healthy market looks like.

Liberty said that the commercial book it inherited when it bought Quinn Insurance out of administration was “seriously underpriced and forecast to be losing money into the future if left unattended. This situation is definitely unsustainable”.

Implications for brokers

Liberty has written to its brokers warning them it requires a “significant price correction” in its commercial insurance business, particularly in property and liability cover, but also added that the insurer would no longer insure workers in more hazardous trades such as demolition, abattoir workers and fishermen working on trawlers.

The move will be problematic for many Irish brokers who have continued to provide clients with low-price cover, and who may now find themselves unable to offer any cover at all in a number of areas.

The group said: “We appreciate it will not be easy for every broker/client to accept these decisions, but as a business owner yourself we trust you will understand logically why action must be taken.”

Rising insurance premiums are not good news for brokers or businesses in Ireland that are already suffering in depressed economic conditions. Economic growth remains vital if the country is to meet its budget and the fiscal targets of its European Union bailout programme.

In its 2013 budget, the government is set to introduce €3.5bn (£2.8bn) in spending cuts and tax increases, so additional costs for businesses could feasibly result in growing levels of underinsurance or companies failing to cover key areas of their business at all.