UK insurers: Arrogant, ignorant or deaf?


This isn’t the first time that PwC have warned the insurance industry. It is just after the 1st Anniversary of a warning that was “supported” by Citi…hence my question.

March 2010: Transparency – Trust – Trends – TRANSFORMATION

“According to our research, non-life firms could see significant capital increases under the directive as it currently stands, so it is vital insurers explore what options they have available to maximise capital now. This will include identifying where they believe current measures are inappropriate.”

Post Magazine Group News | LinkedIn.

Here is a “surprising” blog from Martin Friel at Insurance Age. I say surprising, merely because it was deemed worthy of comment! In the grand scheme of things that have gone so badly off the rails, in UK insurance, this strikes me as pretty mundane. Truth is, the really juicy stories just don’t tend to openly talked about or published. These are more about the people…whether directly (policyholders) or indirectly (investors)…who, ultimately, pay the price of yet more FS shenanigans. Because someone will pay the ferryman and, in reality, it looks like insurer results are going to have to be REALLY bad before they even attempt to justify rate-hikes in the current economic climate – and make highly leveraged, high growth, strategies pay off before financial collapse follows the, evident, failure of risk management and moral corruption – but NOT BEFORE all kinds of awkward questions about rating bases, broking remuneration and claims handling/management are asked:

Why on earth would an underwriter go anywhere near a book of business that had a 90% loss ratio? Unless the company in question is putting some astronomical rates into the market, then I just don’t see how this can work. I’m not an expert by any stretch of the imagination but surely this is essentially encouraging every broker with a poorly performing motor fleet book to, I believe the term is, fill their boots.

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