AXA UK strengthens reserves for old EL claims

AXA UK pumped £39m into prior-year claims reserves in 2012 after being hit by a flurry of employer’s liability claims for deafness, said AXA UK and Ireland chief executive Paul Evans (pictured).

Speaking to Insurance Times following the release of AXA’s 2012 results, Evans said: “We are finding deafness is the new whiplash. It is difficult to test for deafness in the same way that it is difficult to test for whiplash.

“We are seeing a flurry of deafness claims coming through at the moment courtesy of our friends at claims management companies.”

He added that the overall UK general insurance market was experiencing a rise in employers’ liability claims. For example, RSA said in its 2012 results that it had experienced an increase in slip-and-trip claims.

Evans stressed that claims increase was confined to AXA UK’s historical book, rather than the business it is currently writing. He said: “In terms of the book we are writing today we don’t see material issues, but we have strengthened reserves in the historic book.”

The £39m pre-tax reserve strengthening in 2012, which covers asbestos claims as well as deafness, follows a £74m reserve hike in 2011. The 2011 strengthening was mostly related to motor rather than employer’s liability, however.

Factoring in the reserve movements, AXA’s all-year combined ratio for 2012 was 101.2%, a small improvement on 2011’s 101.5%.

Excluding reserve movements, the current-year combined ratio for 2012 was 100.2% (2011: 99.4%).

The current-year combined ratio was pushed above the 100% break-even mark by flood claims, which Evans said cost AXA UK £63m pre-tax. Excluding the flood claims, the current year combined ratio would have been a profitable 98.5%.

Evans said he was pleased with AXA UK’s underlying performance. He said: “Our book has improved its profitability exactly as we had planned. The one area that has been a bit slower is motor.”