'Zurich laid its cards firmly on the table'

One of the big debates with the advent of aggregators and insurers going direct is about how much of SME will be gobbled up by businesses buying insurance online. This week Zurich laid its cards firmly on the table, ruling out a direct commercial offering for the foreseeable future.

Its research indicates that broker advice is needed now more than ever. The news will be a boost to the broking community. So far, growth in commercial direct has been slow.

For example, Direct Line for Business has been running for several years, but it remains much smaller than its sister company, broker-only insurer NIG.

The micro end of SME is the most viable market for direct commercial. But with liability and commercial motor two thorns in the sides of many insurers’ books of business when it comes to claims, and with more and more evidence emerging about the threats of online application fraud, commercial direct could become a vipers’ nest of problems for those insurers that aren’t careful.

Life is tough at the top for Admiral

Admiral has been an exceptional performer in the motor insurance market compared with its peers over the past 10 years.

Competitors are catching up with low-cost aggregator-focused brands, however. This has coincided with Admiral probably peaking in market share and softening rates.

It’s certainly a challenging environment. But, barring any shocks in reserving, Admiral still has good foundations. It has a top-class management with 20 years’ experience in motor insurance; they should not be underestimated.

A good comparison to Admiral is Progressive Corporation in America. It also has a strong track record in performance that consistently impresses its shareholders, even though it’s been in business since 1937. Sometimes you can reach the top and stay there.