Royal & SunAlliance (R&SA) will not sink like Independent Insurance and leave brokers in the lurch, vowed R&SA UK chief executive Duncan Boyle.
He said: "You can always get a road traffic accident as we had with Independent. Clearly, some wool had been pulled over some people's eyes. The governance that sits around a company like ours could never let that happen."
Responding to broker fears of a potential collapse, he added: "We are second largest in the market with a very robust claims reserving process and, as a major FTSE-100 company, a very robust governance process. The comparisons are pretty invidious."
In recent weeks, brokers have been taking R&SA off tender lists and also tried to place blocks of R&SA policies with other carriers. Brokers feared that R&SA would go bust as Independent did last year. The fears were compounded by an announcement last week of major restructuring involving the loss of 200 jobs.
Boyle explained: "With regard to the closure of our seven SME [Enterprise] sites, I was involved in setting them up. When we set up these centres, we said we knew where we wanted to get to ultimately - fewer larger centres.
"We have been working, in a virtual sense, in those sites for some time and brokers haven't noticed. Brokers might think that they have been dealing with the Enterprise site just up the road, but in fact they have been dealing with an operative some distance away."
Boyle rounded on competitors: "Others have moved to few centres very quickly and lost the plot in terms of service and underwriting capability."
Commercial lines is performing very well, claimed Boyle. "There will be another couple of years of rate hardening," he said. "We have been more consistent in this market than our competitors who are in and out. That's not to say we are a doormat," he added.
But, he admitted, personal lines is not in such good shape. "It's a tale of two cities. Our combined operating ratio is 107%-108%. We need to be 102%," he said. "It is a crowded market and we have some of the worst weather-related attritional losses - we are way ahead of budget on losses because of it. Prices must go up," he said.
He said personal lines is still very important for R&SA, but that direct will continue to grow. "Direct is more pronounced in motor than property because of mortgage tie-ins. As we move to commission disclosure, then we will see that 30%-50% commission and overheads is unsustainable, because direct is 20%."
Since taking over Boyle has reshaped the management team. Personal lines director Steve Broughton has, as Boyle put it, "stuck his cue in the rack". He has been replaced with Adrian Brown. Ray Cox has been appointed underwriting director and Rod Kitchen claims director. "It is important to have the right people," Boyle said.
Stock market rules prevent Boyle from comment on a potential rights issue and on Bob Mendelsohn's successor as group chief executive.
