Call comes after AXA slashes public and employer's liability rates for tradesmen by 17%.
Biba has called on the FSA to crack down on insurers who make huge rate cuts, following the news that AXA has slashed its public and employer’s liability rates for tradesmen by 17%.
Peter Staddon, head of technical services at Biba, said the rates were “suicidal” and called on the regulator to take action.
“I would like to see the FSA say ‘tough’,” he said. “If you are stupid enough to reduce rates to this level and then expect [consumers] to support a three-fold increase [when the market turns], then you are wrong.
“It is great for consumers now, the trouble is in two years time when they are going to be facing 100% to 200% rate increases.”
In an email sent to brokers at the end of May, AXA said it would be amending its public and employers’ liability rates across some trades. “This will mean an overall reduction of 17% across the amended rates. While not all trades have seen a reduction these changes will ensure that we are competitive across our target markets,” the email said.
The announcement was sent just days before new AXA chief executive Philippe Maso y Guell Rivet said he would look to increase rates in order to get out of the current soft market.
AXA said the rate decreases within its tradesman and professional product earlier this year were designed to keep the product competitive, and were targeted at some of the trades where AXA had been doing particularly good business.
A spokesman added: “This was always going to be the positioning for this product. It is also auto-rated – so cheaper to administer.”
AXA added that it would like to see rates hardening across most product lines this year.
The tradesman and professional product has achieved £5m premium in the past six months.