2017. What a year. As many of those who know me will verify, I prefer to look forward rather than back. But I don’t think any insurance CEO – particularly any motor insurance CEO – can fail to reflect on 2017 without a sense of bewilderment at how things played out in our industry. The sector is increasingly being challenged by government, regulators and lawmakers. And sometimes it’s easy to overlook the reason why we exist in the first place.
Yesterday I signed off a claims payment in excess of £12m to compensate for injuries suffered by a 7 year-old girl hit by a motorbike, insured by ERS, but stolen and driven by a man several times over the drink driving limit. The cost to ERS and its reinsurers is one thing, but the money will never compensate that poor girl or her family of the quality of life that has been stolen. That is why insurance exists, and perhaps those having influence on our sector should remember that sometimes.
The Ogden problem
I know exactly where I was when I heard the announcement in February of a minus 0.75% discount rate (and so did most of the passengers on my busy train carriage who heard my response when it came through!). The news informed the nature of my hours, days, weeks and months that followed. From daily meetings to determine our plan of action and resubmitting our year end results to Lloyd’s, to ongoing assessment of our claims exposure - it’s a period I’ll never forget.
Telling our brokers that price increases were on the way was a tough message, but being upfront and transparent was key. As a specialist motor insurer we took a proportionate approach – based on the risk exposure to Personal Injury claims – rather than put through blanket rate increases across our book. Brokers told us that we were one of the first to react, it was a risky strategy but it turned out to be the right one. It cemented our position with brokers as the Specialist Motor Insurer.
And since March several carriers have either lost their capacity, stopped writing new motor business or exited the UK motor market altogether. With reinsurance renewals looming large, I’ve made no bones in recent months about the fact that we will see more impact in 2018 from this decision. I’ve gone so far as to suggest our brokers ask their panel insurers how their reinsurance renewal discussions are going. The truth is that for many with sustained exposure to under-priced or poorly performing business, reinsurance rise could well be the final straw.
While Ogden informed much of our year, and has had a damaging impact on our financial results, 2017 also saw some real successes at ERS. In March we made enhancements to our specialist agriculture proposition including launching a dedicated agriculture operations team in our Swansea contact centre. With a 25% uplift in new business enquiries since these changes and notable improvements in our speed of response to brokers across underwriting and claims needs, we’re looking forward to seeing more growth in 2018.
2017 also saw us celebrate the first anniversary of our Prestige motor division. This highly specialist team have underwritten some of the country’s most valuable supercars in the last 12 months, alongside tailored cover for brokers with clients in the sports and entertainment industries.
I also cannot ‘wrap-up’ our year at ERS without mentioning the Gumball 3000 rally. In the year we underwrote one of the most complex and specialist motor risks there is, I feel very proud of the team that wrote this, and ok, yes, I guess relieved it all worked out! The success was a real credit to our bespoke underwriters and we look forward to covering the drivers of next year’s 20th anniversary rally. You can check out some of our blogs and videos here on youTalk-insurance as well as on You Tube.
2018 - a year of challenge and opportunity
So what for 2018? As the door closes on one of the most challenging years I’ve known, I expect that for many carriers the problems of 2017 will persist. The brief glimmer of an imminent decision on a more positive Ogden rate has disappeared in the short-term, with rate assurances given on the back of it now looking shaky.
And what about Whiplash reforms? This year, next year, sometime never? Brexit is just absorbing all of Parliament’s time for anything else to get a look in. And whilst IPT was left unchanged in the Autumn statement this time, will it resume its upward trend again next year?
I do hope though, that 2018 sees those with significant influence over the sector take a moment to reflect on the good insurance does. Whatever it brings, we’ll be helping our brokers maximise the opportunities and navigate the challenges.