Weekly briefing: 22-28 July - More questions than answers

Ben Dyson: Esure saved by diversification

Esure Insurance’s 2010 loss of £7.5m, revealed by Insurance Times yesterday, is a stern reminder of the struggles still faced by personal lines insurers.

The problem for Esure was that, while it was trying to pull its motor book out of a bodily injury-induced slump, it was hit by the one-two punch of the severe weather at the beginning and end of 2010.

That the company managed to halve its losses in such a difficult year is impressive, but as the main operating subsidiary of the Esure Group, and therefore its flagship, it clearly still has more work to do if the group is to have a hassle-free flotation next year, let alone if it is to raise the £2bn it is reportedly seeking from the IPO.

However, the group results show the value of having a number of strings to your bow in times of trouble. In particular, owning a stake in a price comparison site (presuming it’s one with a successful ad campaign) can prove a useful counterpoint to a large personal lines book. Esure owns 49% of Gocompare, which it accounts for as a joint venture on its books.

The £17m technical loss emanating from Esure Insurance was more than offset by £38.9m in commissions, and Esure’s share of operating profit from joint ventures added another £10.2m to its bottom line. This all led to the group’s new ultimate parent, Esure Group Holdings, turning a 2010 profit of £14.1m.

Little wonder that Peter Wood is keen to buy the rest of Gocompare.

As it stands, Esure is presenting its putative investors with two conflicting stories. With motor rate hikes apparently slowing already, and household rates still lagging chief executives’ aspirations, it remains to be seen whether it can align the two. But it if can, its future could be bright.

Sam Barker: Loss assessor in the docks

Insurance Times interviewed Mike Kenney, the former chairman of collapsed broker Ward Evans, this week. After almost 10 years of silence, our exclusive profile reveals Kenney’s take on what really happened at Ward Evans- and his plans to rejoin insurance broking.

Elsewhere, a Liverpool loss assessor and four other men will appear in court accused of conspiracy to defraud. AXA and Zurich are insurers affected by the fraud, a Merseyside Police spokesman has confirmed.

The charges relate to false reports of arson and burglary and fabricated claims over escape of water.

Liverpool-based loss assessor Martin Bookey will appear in Liverpool Crown Court on 2 August charged with four counts of conspiracy to defraud, the police spokesman said.

The other four men are also charged with counts of conspiracy to defraud.

The total value of the fraud was around £170,000.

David Blackman: No end to the CMCs

Everybody in the insurance industry knows that claims costs have been growing like ‘topsy’, as one senior executive put it to Insurance Times, over the last few years.

But the Ministry of Justice’s claims management regulator’s annual report, published last week, show just how fast the turnover of such firms is growing.

Claims companies saw their income grow by nearly 60% to £581m during 2010, of which personal injury cases accounted for nearly two thirds.

What other sector of the economy saw these kinds of rates of growth in 2010?

The report also sheds some light on the scams being perpetrated by the less reputable end of the claims management sector. These include pocketing fees in advance from customers for handling claims and then doing nothing further.

The only ray of light for insurers in this report is the regulator’s finding that the CMCs’ focus is turning towards payment protection insurance rather than personal injury cases.

Nevertheless this report will make worrying reading for those hoping to see a fall in claims inflation.

Saxon East: No choice but to bring in admin fees?

Could we see more administration fees creeping into broking to offset the charges of regulation?

Brokerbility is piloting it, Bluefin already put on a £25-per-policy fee and CCV and Jelf haven’t ruled it out.

The Brokerbility feedback is that clients are understanding of the fee, especially if there is a good relationship with the customer.

The FSA might complain against brokers putting on admin fees.

But brokers have a good excuse. This isn’t about fully paying off the cost of regulation, it's merely a way of offsetting some of the huge and increasing costs being heaped on intermediaries by the FSA.

Also, the FSA is hammering insurance brokers, most of whom have never sold PPI, so this is their way of reclaiming some of the turf.

If insurance brokers end up having to pay for other failed products such as warranty insurance or credit card protection, most of which brokers rarely trade in, then there may be not choice but to introduce administration fees.

Danny Walkinshaw: Confusion over Q2

There was hysteria at the start of the week when reports emerged in Ireland that Sean Quinn, the founder of the Quinn Insurance empire, was plotting his return. The reports suggested that Quinn’s new firm, Q2, was registered in Malta and included a number of his former executives.

All sounds quite believable, right? Not now, as a cloud of confusion has formed. The latest reports suggest that Q2, a company reportedly set-up to rival Quinn Insurance, does not actually own a licence to trade in Malta, according to the regulator. The company was also reported to have agreed a reinsurance deal with Swiss Re, although this has also been denied.

Will Quinn ever make a comeback? It looks a long shot, but never rule it out.

Accident management firm Helphire has had its ups and downs. Most recently it was forced to reveal an accounting error that had led to an overstatement of the amount of money owed by insurance companies. We looked back through the archive at Helphire’s story over the last three-and-a-half years.