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 Insurance Matters....with Europa General |
Financial Fatigue!Over the last 12 months we have heard nothing but bad news in the Financial services Sector which has given me a bad bout of Financial Fatigue. The Press have concentrated on the Banks, Investment Houses, Hedge Funds. We have read reports about the great and good in the Financial markets reporting disastrous results. We have seen footage of staff from Lehmans leaving their offices with no jobs - just a box of memories. Many household names have bitten the dust. Governments have bailed out their banking systems and indeed now some governments need bailed out themselves!! One sector of the Financial market has been quiet – Insurance. Despite all the gloom the Insurance Companies seem to have ridden out the storm without rate increases. That is all about to change. Over the next 2 months Insurance Companies will be reporting their 2009 results. Without exception they will not be good. Traditionally Insurers accepted marginal profits but mostly losses on their Underwriting however they made up for it by achieving good Investment results on their Reserves. Hands up anyone who knows anyone who made reasonable investment returns in 2009. Therein lies the problem. Despite some efforts by some Insurers to introduce underwriting discipline to the market, competition and a desire to retain market share has resulted in underwriting losses and in many cases under-performing investments. So what does it mean to use rate increases. Insurance rates increased substantially from 2001 to 2005. Insurance companies built up their reserves during this period waiting for the next 9/11. It did not come. From 2005 they reduced rates to attract more business and retain market share. Underwriting losses were supported by the release of unused reserves. 2008 saw an unprecedented use of reserves. The pot is now empty and the only way to survive is to increase rates. How far have they fallen – Motor Insurance rates in Northern Ireland for example are now at 1997 levels. This level is not sustainable. January and February renewals have already seen rate increases and we will see these rises continue in 2010 across most classes by 15%-20%. Now is the time to look at your Insurance programme and consider measures to contain these increases. Higher Excesses, Risk Management or even a programme of self-insurance will help contain these costs. Don`t wait until renewal time. Engage with your Broker and Insurer. Act now and discuss ways of having your risk looked at as an individual business and not just rated as one in a herd. Sorry for the bad news but remember.......Don’t shoot the messenger. Jack McIlduff is Managing Director of Europa General Underwriters (NI) Ltd. Europa General offers bespoke conventional and non-conventional indemnity and motor insurance products to suit your business requirements. For more information on any of the above feel free to contact Europa General by phone on 028 9034 8856, online at www.europageneral.com or by email. The content of this article is provided for information purposes only and does not constitute professional or other advice.
Feb 2010 - The ‘Inevitables’……Death, Taxes and Insurance Renewal The old saying goes, that the only things inevitable in life are Death and Taxes. If you are in business, your Insurance Renewal can be added to the list and the one thing the three have in common is, nobody looks forward to them. Why does insurance fall into this unfortunate trio when it is designed to protect balance sheet against loss of your property or claims arising from your legal liability to others? You pay a premium and your Insurer pays the losses - nothing could be more equitable. Your CFO can sleep easy at night knowing that the Balance sheet is protected, at least from these risks. So..., where does it all go wrong? ....................................... Claims. You are happy transferring risk to the Insurer, but when a claim occurs you get stressed. If it is loss or damage to your property, you may feel that the claim is not being settled quickly enough or at a value you consider accurate. Real stress usually creeps in when a claim is made by a third party or employee, especially when the Insurer plans to settle the claim or holds a substantial reserve on the claim, when you are adamant that you are not a fault. The first knowledge you have of this is when Renewal comes around and claims experience is produced by the Insurer. This all leads to conflict. When Renewal comes around, the Parties are at war. Usually caught in between, is your Insurance Broker who tries to bring the parties together. They are torn between the desire to satisfy the client’s needs and recognition of the wording in the Insurance Policy. Some time ago, BT had an advert running in which that great actor Bob Hoskins says, “It’s good to talk”. Talk to your Insurer on a regular basis during the year - quarterly is good for low claims frequency. Have them produce a claims review with planned action and rationale. Get to know each other better. Insurers would much prefer to build a long lasting relationship with a policyholder – it gives them a chance to know and understand your business and work together with you, to reduce risks going forward. Insurers are more than happy to engage with their Policyholders, after all, there are only two names on the contract: You and Your Insurer. It’s good to talk, but better to understand. End the war today. Jack McIlduff is Managing Director of Europa General Underwriters (NI) Ltd. Europa General offers bespoke conventional and non-conventional indemnity and motor insurance products to suit your business requirements. For more information on any of the above feel free to contact Europa General by phone on 028 9034 8856, online at www.europageneral.com or by email. The content of this article is provided for information purposes only and does not constitute professional or other advice.
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