GAB chief says loss adjusting industry faces reduced margins

Loss adjusters could face consolidation as insurers put them under pressure to cut costs, an industry leader has warned.

Philippe Bès, global chief operating officer and UK chief executive of GAB Robins, said the current pressure on insurers would be passed on to loss adjusters.

"There will be pressure on margins as far as we're concerned.

"We will have to manage costs very effectively," Bès said.

Consolidation was possible among even the largest loss adjusters, he said.

A clear trend had yet to emerge towards insurers insourcing or outsourcing their loss adjusting operations but, he argued, outsourcing would become dominant.

Bès said GAB Robins managed costs more effectively than competitors such as Crawford Group or Lindsey Morden Group, which owns Cunningham Lindsey.

Profitability increased by 29.5% from 1999 to 2001, he said. No other figures were available.

Crawford's group results for the second quarter showed operating earnings of $16.8m (£11m) in the six months to the end of June. This was a decline from $31.8m (£20.8m) in the same period last year.

Revenue also fell, to $349.8m (£228.7m) from $365.9m (£239.2m) the year before.

Lindsey Morden Group showed revenue of C$109.9m (£46.2m) in the first quarter of the year, up from C$101.8m (£42.8m) in the same three-month period last year.

Expressed as a percentage of revenues, the group's operating earnings over the six months fell to 4.8% from 8.7% the year before.

A breakdown of Lindsey Morden's figures for its UK business shows revenue increased to C$40.7m (£17.15m) in the first three months of the year from C$39.2m (£16.4m) in the same period last year. Operating earnings increased to C$2.5m (£1.1m) from C$2m (£0.8m)the year before.

UK operating earnings increased to 6.2% of revenues in the first three months of 2002 from 5% in the same period last year.