Brokers’ gut reaction may be one of concern at the RSA takeover, but there is likely to be more upside than downside 

When a major insurer such as RSA faces takeover, there is always a gut reaction from brokers concerned about the impact on their business.

What will the new owner be like? Will they cut back on certain lines or offer worse customer service?

But let’s flip on this on its head for once: the likely takeover of RSA might actually be very good for brokers.

Let’s support this claim with a premise.

The premise is that RSA’s brokered-customer service is bottom-ranked against other UK insurers, according to Insurance Times’s Five Star Survey of brokers.

It can only get better. 

RSA received two stars out of five in commercial lines, and it was only one of three insurers to obtain two stars. 

It is also the bottom-ranked in  personal lines with two stars. 

Intact, which is likely to take over the UK arm having just confirmed all the financing is in place, will be working from a very low starting point. 

To RSA’s credit, they have acknowledged this, and promised to do better.

Secondly, and most importantly, Intact does not have a footprint in the UK, meaning the takeover will be pretty clean.

There are no offices to shut down or staff to let go on the basis of duplication. 

LV= had a fall (and subsequent recovery) in our research ratings following the takeover by Allianz.

A takeover from one major incumbent to another will always cause some level of friction and upheaval. 

RSA and Intact should not have much of this problem. The only friction that might occur is if Intact decides to install its own managers in place of the current UK team. 

RSA scaling back in UK

And what about the brand? Intact will surely eliminate the RSA name. Yet this will make little difference to brokers trading with clients up and down the country. 

Customers rely on their advice and its hard to imagine even one customer raising any objection to the disappearance of the name. 

The final point is that brokers have long memories. Over the last ten years RSA has scaled back or completely pulled out of a number of lines. 

For example, RSA pulled out of brokered personal motor in 2015. And two years ago, RSA announced it was exiting three lines and reducing London market premium by a third.

Under chief executive Stephen Hester, its group net written premium has fallen from £7.4bn to £6.4bn - with the UK taking the brunt of the shrinkage. 

Hester has improved the underwriting result and delivered for shareholders, but the inescapable conclusion is that under his reign, service to UK brokers has been underwhelming. 

Brokers should expect better customer service and more consistency under Intact. 

This is one takeover that brokers should welcome.