Ageas exits commercial lines - the insurance landscape is changing

By Content Director Saxon East

Another month, another FCA letter. This time it is about commercial property owners’ insurance. 

This marks the latest in a long salvo of regulatory paperwork. 

Nobody knows what is coming next from the FCA.

However, past thematic reviews give us a clear heads up about what could happen.

The FCA’s fair value focus and recent pricing reform is likely to mean insurers will need to have oversight of SME intermediaries, to better understand exactly who takes what in the value chain - such as commissions and administration fees - and whether this ends up providing value for the end customer. 

At Ageas’ half-year results, commercial gross written premium - including other lines except home and motor - was just above £100m, compared to nearly £500m for motor and home. 

This month (February 2022), the insurer confirmed that it has sold renewal rights for its commercial business to Axa UK and Ireland.

Getting commercial lines off its books means that management time can be spent concentrating on the core personal lines business, which is itself undergoing a huge challenge from the FCA’s fair pricing changes.

Combine this regulatory weight with the reality of commercial lines being non-core and insurers increasingly needing scale to gain sufficient expansion and Ageas’ decision has a certain logic.

Axa commitment 

For Axa, although not a massive deal, buying Ageas’ commercial book shows the insurer’s commitment to the UK.

Some commentators can remember a time when there was talk that Axa would exit UK SME and personal lines.

Having messed up the Swiftcover acquisition and with underwhelming underwriting profitability, there was talk the insurer might exit the UK amid Paris talking about getting tough on underperforming segments across the globe.

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