Torrance: Jackson benefits will outweigh loss of ATE business

The benefits of the pending Jackson reforms will more than compensate for the loss of after the event insurance business that the reform will cause, says Allianz UK chief executive Andrew Torrance.

“Allianz and myself are a great supporter of Jackson because we think the benefits of Jackson coming in will far outweigh the profits that we make in the legal protection business,” Torrance said today following the release of his company’s first half 2012 results.

Gross written premiums (GWP) in Allianz UK’s legal protection business surged 43.5% in the first half of 2012, and brought in underwriting profits of£1.7m. The company attributed the bulk of the GWP growth to the after the event segment of its legal protection book.

The Jackson reforms, which are due to come into force in April 2013 and aim to curb compensation culture, are expected to be the death-knell for personal lines after the event (ATE) legal expenses insurance. No-win, no-fee solicitors ask their clients to take out ATE insurance to protect them in case they lose the case, and so are deemed to be one of the contributors to compensation culture.

Torrance said the first-half surge in Allianz’s legal protection GWP showed that he claims management industry is “alive, well and burgeoning” despite the threat from Jackson.

He added that it would not be possible for the legal protection book to compensate for the loss of the ATE business by itself. “We have got plans to continue growing other parts of the retail business to compensate for what we do see as the likely drop in the legal protection premium income in 2013.”

Torrace said it was difficult to estimate how much premium would be lost as a result of Jackson because the details of the legislation are still unclear and may not be fully known until January 2013.

However, he said the company was well-cushioned from the impacts for at least 2013 and 2014 because the premiums from ATE business written today are typically not earned until two years later.

“We will have lots of business and lots of earned premium coming through in 2013 and 2014 and indeed going into 2015 from the business we are writing today,” Torrance said.

Separately, Torrance revealed that he Your Cover direct household policies would complete their roll-out onto the four major price comparison sites next year. The products are currently available on Moneysupermarket and Confused, and will be available on Gocompare from September. The product will be added to Comparethemarket next year.

Torrance said that once the aggregator roll-out was complete the Your Cover household business “will begin to make some contribution to the You Cover volume.”

The GWP for the Your Cover motor product more than doubled in the first half compared with the same period last year.