Daily briefing: Monday – Xchanging gets its house in order

The insurance business of troubled outsourcing firm Xchanging is about to change. As we reported earlier today, Xchanging has created a single business unit called Xchanging Insurance Sector, which will incorporate its three businesses: Xchanging Broking Services (XBS), Xchanging Ins-sure Services (XIS) and Xchanging Claims Services (XCS).

The move to streamline these operations comes after a rocky period for the group and it began a company-wide review in March intended to improve the end result for its customers. But the Xchanging business has not had a smooth ride. In February, it was forced to release a profits warning, which saw its share price tumble. The IT and back-office support firm’s chief executive David Andrews resigned amid a £100m writedown in connection with its Cambridge Solutions business, bought in 2008 for £145m.

The company’s troubles caused concerned among its biggest clients, including the Lloyd’s market. Xchanging Insurance Services (XIS) chairman Richard Bucknall wrote to several London market heads to calm their fears. XIS is 50% owned by Xchanging, while Lloyd’s and the International Underwriting Association also share 50%. He assured them its shareholders can buy out Xchanging's 50% stake "in the unlikely event that any shareholder ceases as a going concern".

The company last week reported solid trading in the first quarter of 2011, slightly ahead of expectations. Today’s insurance reorganisation should go some way to quelling the fears in the insurance market about its future. There is not expected to be any impact on Xchanging staff for now. However Insurance Times also revealed today that Xchanging Broking Services managing director Artur Niemczewski is one of the casualties of the shake-up, and will leave the company. He joined the company in September with big plans to refresh the company’s offering to brokers. A former big hitter at mega brokers Marsh and Willis, Niemczewski is unlikely to be out of action for long.

Here we go again …

Is the insurance industry ready to deal with another ash cloud disruption? The answer appears to be yes. Travel insurers are monitoring the situation closely and are ready to act should they be called into action to deal with the type of claims that last year cost them more than £60m.

Many insurers have since updated policies after coming in for heavy criticism for not paying claims and being accused of hiding behind a so-called ‘Act of God’ clause. If the situation does escalate, the industry will be in the spotlight once again. A senior source at a major insurer told me today that the industry will need to give absolute clarity on its position to paying claims at the earliest opportunity.

Finally, Willis UK & Ireland chief executive Brendan McManus’s responsibilities just got a whole lot bigger. His role has been extended and is now chief executive of Willis Ltd. A show of faith by Willis chief Joe Plumeri or are there more changes to come in the UK business?

Danny Walkinshaw is digital news editor.