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Headlines mixed for insurers

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.