Thursday: Zurich and AXA's turnaround

Zurich UK and AXA UK have both posted good sets of results for 2011, in a tricky market.

AXA UK made an underlying profit of £133m in 2011, compared with a 2010 £63m loss, while Zurich UK’s general insurance business made a profit of £163m in 2011, up 28% on the £127.5m profit it made in 2010.

AXA UK reported a current year combined ratio of 98.9%. This excludes any reserve releases or strengthening for prior years.

Including reserve movements, however, the ratio was 100.9%, indicating that AXA must have had to pump extra money into its loss reserves in 2011 for business written in previous years.  

Both insurers have been careful to offload business they didn’t want over the last 18 months, and both have increased pricing in motor.

Zurich did not break down its combined ratio for motor, but the insurer has reduced its GWP by 1.6% last year.

AXA had a motor combined ratio of 101.7% for 2011, and Evans said that hardening rates had been sabotaged by soaring personal injury claims inflation.

Hopefully the government’s recent push on tackling whiplash will lead to improved results for both insurers in the future.

NHS cover goes private

Insurers could have a chance to insure more parts of the NHS, following suggestions from Marsh and the Department of Health.

The question is whether or not the private sector would want the business.

The department is considering letting insurers write clinical negligence business and effectively compete with the NHS Litigation Authority, the state-backed body that currently handles these claims, according to the Financial Times.

But the NHS is taking a battering from rising numbers of costly clinical negligence claims, which could deter insurers.

Last year, the government estimated that it was facing a bill of £15.7bn for these claims, and clearly believes that the private sector’s expertise could boost efficiency and lower cost. Marsh published a report last month that said insurers would probably not be interested in stepping into this area at the moment, but added that the private sector is likely to be interested in handling non-clinical negligence claims.

In 2010/11, 8,655 claims of clinical negligence were dealt with by the authority and £863m was paid out, up from 6,652 claims of clinical negligence and £787m the year before.

But the proposition will be more attractive to insurers once the Jackson reforms start to drive down the cost of litigation in the sector and remove ambulance-chasing lawyers that cause a lot of the claims.