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- News-in-brief
- Travel disruption - your rights
- MoJ reforms for personal injury claims
- Flood and Water Management Act 2010
- Government decision on pleural plaques
- Insurance and risk
- Taking the fall - the real cost of slips, trips and falls
- Are you losing money to toll fraud?
- Market News
- Time for change?
- Life begins at 40.....
- 40th anniversary - part II
- Industry focus
- Empty threats - are your unoccupied buildings at risk?
Time for change?
In previous articles we have looked at developments in the general insurance market and how (and why) rates have become so depressed. Additionally we have looked at why there is a real need for insurers to address this issue to avoid more drastic action in the future.
We often refer to the insurance market as being cyclical, with peaks and troughs becoming apparent depending upon what stage of the cycle we are in. This has never been and never will be ideal for a prudent Finance Director who is looking to budget his or her costs with any degree of certainty over a period of time.
Needless to say, the recession has created an additional challenge for insurance companies. How can rates be increased when policyholders can least afford it? The reality is that many businesses are down-sizing (those that manage to survive that is) and therefore the pool of premiums from which claims can be paid is reducing quite significantly. This places even more presssure on insurers to address their books of business, a vicious circle that seems impossible to break.
Recently it was announced that administrators had been appointed to Quinn Insurance. The troubled company was ordered to cease writing new business in the UK following intervention by the Irish Financial Regulator.
The media has quoted the Regulator as saying "The effect of this action is to prevent Quinn Insurance Limited suffering further financial losses from its currently unprofitable UK business."
“Currently unprofitable UK business?” Quinn has been engaged in providing insurance solutions (for the contracting sector in particular) for some time and has been very aggressive on pricing, undercutting many other major insurers by a considerable number of percentage points. Many of us have believed for some time that this has looked unsustainable and quite clearly, now claims have started to roll in, that has become the case.
So what does this do for the insurance industry as a whole? Obviously it doesn’t do it any favours in the reputation stakes. Many of you reading this will remember Independent Insurance. that ceased trading back in 2001. The big difference here is that this hasn’t happened post the 9/11 disaster as it did with Independent. Capacity is still plentiful in the current market and whilst there will undoubtedly be cost implications for many of those businesses currently insured by Quinn, it is unlikley that anyone will be left “high and dry” and without protection.
Quinn may indeed find itself in new hands but, clearly, whoever takes on that challenge is going to have to review the business model in microscopic detail and address the issues that have led to the current situation.
So what about Perkins Slade? What do we do to ensure that our customers are not exposed to such risks? We constantly monitor the financial performance of all of our insurance carriers and other key suppliers and where there are concerns we address them. If that means seeking alternative insurers and recommending a move, then that is exactly what we will do. We do not and will not engage in activity with companies that do not meet the strict requirements of our own internal Security Committee.
The current climate continues to provide all of us with many challenges but, for us, maintaining absolute client satisfaction and continued protection in these difficult times is still our number one priority.
Before signing off, you may be wondering, “How will you cope with renewing/replacing all of the Quinn business you have?”
Answer: “Simple. We never traded with Quinn and had absolutely no plans to. We do our homework!”
Next steps
To discuss the issues raised in this article or for further information, please speak to your usual Perkins Slade contact. Alternatively you can call 0121 698 8000 and ask to speak to a member of our corporate team or email corporate@perkins-slade.com
