Insurer chief blames credit hire industry for poor combined ratio.
Allianz chief executive Andrew Torrance has blamed the credit hire industry for inflating the insurer’s retail business combined ratio to 105.7% in the first quarter of 2008.
Torrance said the company was taking action to minimise motor claims inflation caused by credit hire, which resulted in an increase of around 2% in combined ratio for the retail division in 2007.
He said: “We’re seeing increased penetration of non-fault third-party motorists being pulled into the credit hire arena, and we’re working hard to control the costs once the credit hire arrangements are in place.
“During the end of 2007 and the beginning of 2008, we’ve given additional training for managing credit hire claims expenses, and we’ve changed our processes so that when the credit car hire companies correspond with us, we can deal with that correspondence more rapidly.
“Credit hire companies are very good at communicating with you at 3pm on a Friday asking for an extension over a weekend,” he added.
Allianz also wants to improve rate strength and has set a target of a 5% increase year-on-year in commercial property and liability, which is a percentage it has already achieved for motor fleet.
In personal lines, household rates have not been raised aggressively and motor has seen a modest but steady increase of between 0.5% and 1% per month.
Allianz cited lower rates, claims inflation, enhanced commission and a reduction in investment income for its 13% drop in pre-tax profit, falling to £42.3m in the first quarter against £48.6m for the same period
Its gross written premiums rose 6% to £383.3m from £361.6m, boosted by its commercial lines GWP that grew by 7.2% compared to the first quarter of 2007.
The combined ratio for commercial lines stood at an impressive 91.3%, but this was largely driven by prior year reserves, which were around £20m for the first quarter and £100m last year.
Despite its high combined ratio, the retail division GWP grew 4.2%.