Company made cutbacks in motor broker and aggregator channels to restore profitability
Co-op’s director of General Insurance James Hillon said he is looking to grow the business after cutting back in 2013.
But he added that the company would not grow for growth’s sake and that the market should not expect a huge upswing in gross written premium (GWP) in 2014.
Co-op’s general insurance gross written premium fell 20% to £443.6m in 2013 (2012: £555.7m) as the company pared back its motor book to restore profitability.
Speaking to Insurance Times following the release of Co-op’s 2013 results, Hillon said: “The gross written premium has fallen markedly year on year, largely due to those deliberate actions. But that is something that over the coming 18 months to two years will be seeking to turn around as we build firmer foundations in our business.
“It was the growth potential in the business that led the group to retain the insurance business, so it is now up to the management team to make good on that potential.”
However, he added: “We want to get back to growth in the business but we do not want to get back to growth for growth’s sake.
“2014 is a year of establishing firm foundations, making sure we have the right pricing and underwriting capabilities and making sure we move the proposition forward for our customers. I don’t expect any sudden upswing in GWP this year.”
Cutbacks bearing fruit
Hillon said that the 2013 GWP drop was a result of “fairly strong actions” to reduce the level of risk in Co-op’s motor portfolio. The company made the cutbacks in the “higher-risk distribution channels, particularly broker and aggregator channels” Hillon said.
The company has also introduced credit scores into its pricing process.
The actions are bearing fruit. Co-op’s motor combined operating ratio (COR) improved by 17.5 percentage points to 106.5% (2012: 124.1%).
This improvement was the main reason Co-op’s general insurance business returned to underwriting profitability in 2013.
Despite the improvement Hillon said that the Co-op’s general insurance business was at an early stage of its recovery.
He said: “To be clear this is a two to three year period of turnaround.”