Insurers garnered a mixed bag of media coverage in the first half of 2014 as a winter of discontent preceded green shoots of recovery by the time annual results came around. PremExtra reflects on the main topics
January 2014 Downing Street drawn into storm claim
controversy
Two months of appalling winter weather resulted in critical
media coverage and insurance company bosses being summoned to
Downing Street after it appeared that a new scheme to keep flood
insurance affordable for everyone was leaving some people out of
pocket. According to a Whitehall memo seen by the Financial Times,
Downing Street directly ordered a review of the issue.
Insurers found themselves in bother again just a few weeks later
after a front-page Daily Telegraph 'expose' revealed the alleged
purchase of millions of medical records from the NHS. The article
prompted a stiff rebuttal from the Institute and Faculty of
Actuaries which insisted the Telegraph 'research' had been
publically available on its website.
April 2014 Return to profitability for many big
insurers
April brought fewer negative news developments, with a study by
global accountants Ernst & Young suggesting many motor insurers
may be approaching profitability. One insurance company not
included in the study was the Cooperative, which saw profits surge
to £33.6m in 2013 - despite huge losses in its banking
division.
Elsewhere in the insurance industry, the prospects for some
defendant solicitors supporting insurers appeared bleak when QBE
announced its panel would shrink by a quarter, with 12 firms
retained by the company.
May 2014 PII debate is fuelled when regulator takes a
hand
The high cost of solicitors' professional indemnity insurance
continued to stoke discussion in May, with the Solicitors
Regulation Authority playing a leading role. The majority of
responses to an SRA consultation on unrated indemnity insurers
wanted them barred, according to a report in Legal
Futures.
However, the regulator held out against a ban, even though 18 of
31 responses said they were in favour. This followed news that
another unrated insurer - Iceland-based ERIC - was heading for the
rocks.
The solicitors' PI saga continued on into Julyas Policyholders
with Latvian insurer Balva received fresh hope of making a
successful compensation claim after the Financial Services
Compensation Scheme (FSCS) declared Balva to be 'in default' -
which means the FSCS can accept eligible claims against
Balva.
The corollary, according to a report in the Law Gazette, is that
hundreds of law firms are thought to have signed up to policies for
indemnity cover with the unrated insurer.
Some big players announced their Q1 results in May, with the likes
of Aviva's UK general insurance division writing £845m of net
premiums in the first quarter of 2014, down 8.4% on the £923m of
last year. Car insurer Admiral also suffered financially after
turnover fell 7% in the first quarter. Not surprisingly, senior
executives at both firms said they remained upbeat about financial
prospects.
June/July 2014 UK is too late to follow Irish
example
A decade on from the introduction of Ireland's 'lawyerless' PIAB
model, its potential for replication in the UK was played down by
reports in the insurance press during June.
Patricia Byron, chief executive of the Emerald Isle's Personal
Injuries Assessment Board was quoted as saying the UK had left it
too late to adopt a personal injury compensation model similar to
Ireland's. She told Post Magazine the issue of referral fees
'enmeshed' between the legal profession and claims community would
rule out a board model in the UK.
In a month when personal injury topics generated substantial news
coverage, Post also reported that the Institute and Faculty of
Actuaries had produced a new categorisation for serious spinal and
brain injuries to help insurers estimate future liabilities more
accurately.
The new system is based on long term analysis of motor insurance
data that showed claims of £1m or more were likely to be settled as
periodic payment orders (PPOs), meaning they often remain on
balance sheets for decades.