Like Caesar calling the fate of wounded gladiators, the ‘down’ decisions of the rating agencies have enormous impact on the businesses they appraise. For how long can these unregulated entities hold sway?

 

This week’s news that the rating agencies have come under the scrutiny of European politicians will be welcomed in insurance circles. The ongoing events of the European debt crisis are starkly highlighting the power of the rating agencies, with Moody’s recent downgrade of Portugal’s debt the latest reminder of the startling power these unregulated businesses hold.

Groupama knows this only too well. It has been downgraded twice this year because of its exposure to sovereign debt. It is unlikely to be alone, however. As the crisis continues, other European insurers will almost certainly be downgraded, and the impacts on their business could be huge. All this at the hands of unregulated entities.

There has been growing resentment of the unchecked might of the rating agencies since 2008. As politicians are now adding their voices to those of business leaders, change is beginning to look more likely. The Greek foreign minister, Stavros Lambridinis, has accused the agencies of “madness”. That’s fighting talk. For insurers, at least, Solvency II should increase transparency and thus perhaps lessen the stranglehold of the ratings agencies – but many believe that won’t be enough.

Time to branch out

Insurers’ focus on the regions continues apace with the news that LV= Broker has confirmed the appointment of a new boss for its Exeter office. Once very much old hat, branch officers are now all the rage, with insurers including AXA and NIG as well as LV= making them a key plank of their broker offering.

This makes the battle for talent in the regions all the more bloody as insurers slug it out for the best people in a narrow pool. With brokers also bare-knuckle fighting for regional talent, talented underwriters and salespeople find themselves in a rather attractive position.

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