Personal lines director warns competitors that buying up bits of portfolio ‘would not be sustainable’
AXA is to hike its household rates following a surge in weather-related claims. Personal lines director Mike Keating said parts of the household market were “not sustainable” following three years of exceptional weather events that included the great floods in 2008, the big freeze in London and surrounding areas at the start of last year, and the more recent snow and ice.
It also bore a disportionate amount of the loss of last year’s Cumbrian floods – around £60m.
“I will be increasing household rates across the portfolio in selected segments but especially around the weather perils and the bits hit by general events.
“Some of my competitors will see this as an opportunity to buy bits of my portfolio but given what I have described, that is not sustainable,” he said.
Brokers will see rate increases dependent on the profile of business that is written with the insurer.
Keating said: “I have spoken to a number of broker partners and, to date, they have all been receptive to the strategy.”
Asked if other insurers would follow, Keating said: “I just hope that the market has the good sense to follow the good behaviours and actions being expected in the motor market.”
Elsewhere, AXA has launched its own direct motor product that targets experienced drivers.
The new product will focus on those who have ‘proven’ experience – fewer accidents, more years’ driving experience and fewer convictions – and rewards these drivers with comprehensive cover at a competitive price.
Keating assured brokers that the new offering would not threaten their business.
“This is complementary to what we do in the intermediary space. The last thing I would do is cannibalise our own book.”
Keating said AXA would not be forced into a “knee-jerk” reaction of putting up personal lines motor rates across the board.
Instead, AXA had been putting up rates “a little bit” each month, with a gradual strategy.
“We have a plan to put rate increases across different segments of the portfolio and we will continue to do that to protect our bottom line,” Keating said.