Chief executive confident of hitting 100% commercial COR target
The insurance industry should put aside its problems with Flood Re exclusions and focus on implementing it, according to Direct Line Group chief executive Paul Geddes.
Speaking to Insurance Times following the release of Direct Line Group’s 2013 results, Geddes also said he was confident of hitting his target of a sub-100% commercial combined operating ratio (COR) in 2014, absent higher-than-expected weather claims and other large losses.
Flood Re, which will replace the Statement of Principles in summer 2015, currently excludes properties in council tax band H, leasehold properties, houses built after January 2009 and small businesses.
The exclusions have attracted a great deal of criticism from bodies such as the British Property Federation and Biba, as well as Lloyd’s insurer Hiscox.
However Geddes described the discussion over the exclusions as “an old debate”.
He said: “It is a debate which finished last year. The industry and the government have got a deal and now we should bed down and get it delivered.
“We have got 350,000 customers depending on us to deliver it. With this recent flooding the risks of flooding are highlighted to everybody and I think we shouldn’t endanger getting that done by going back on old ground.”
However he acknowledged that insurers with different business mixes to Direct Line Group may not share his views.
He said: “For us as a big mass-market insurer we think there is a lot of work to be done and that’s our focus.
“I’m not criticising anyone else but our focus is working closely with the ABI, supporting the ABI, working closely with government to get this done. There is a lot to get done by 2015 and really that is where all our efforts should be.”
Direct Line Group’s commercial business, which includes broker-only insurer NIG and Direct Line for Business, is targeting a COR of below 100% for 2014.
However, in 2013 it was still a long way from this target in 2013, when it reported a COR of 106.8%. Even excluding the £12-£13m of flood losses it incurred flood losses, the 2013 COR would have been 104%.
But Geddes said: “Subject to weather ad large losses, we are feeling confident in the target.
“We have been doing a good job on keeping underwriting discipline. So we feel good about that business. We have done a lot of investment on e-trading. Direct Line for Business is doing well. Jon [Greenwood, commercial managing director] and his team should be commended with really getting real momentum into that business.”