Andy Watson says motor premiums have come down too sharply before any legislation has been passed of Ogden rate change or whiplash reform
The industry has been too hasty dropping motor premiums in anticipation of changes brought on by the Civil Liability Bill according to the chief executive of Ageas UK.
Andy Watson made the comments after posting Q1 results for this year that showed a 13% drop in GWP across the business (£393.3m vs £449.8m).
The results showed a return to Q1 profit of £9.2m and Watson confirmed he was pleased with the profitability of the motor side, which saw its combined ratio improve to 91.7% from 106.4%.
But he said the anticipated changes to the Ogden rate and whiplash reform had pushed premiums down across the sector too greatly. GWP on the motor side of the business dropped to £196.9m compared to £233.8m for the same period last year.
Watson admitted it was a concern.
“The motor market is anticipating legislation changes around whiplash reform and changes to the Ogden rate, but neither of those things have happened,” he said.
“They’ve been talked about and the legislation is currently going through its parliamentary process, but the changes have not yet taken place, so the market is getting a little ahead of itself I think. We’ll see where it goes and it’s something we will monitor for the rest of the year.”
Speaking to the Insurance Times at the annual Biba conference, Watson confirmed this was an issue he had discussed on the day with another insurer chief executive. He said it was an issue that would be hitting the GWP of motor insurers across the industry.
“It’s a live conversation,” he added. “Pricing is coming down and if it continues to come down it will be something we would want to monitor. Prices continuing to fall when there’s no significant reason for them to fall doesn’t make a lot of sense.”
Top line attention
GWP also dropped on the household and commercial sides of the business. Watson said notwithstanding the effects of ‘the beast from the east’ the results were not unexpected following moves over recent years to cut less profitable aspects of the business, such as their special risks account last year.
He said the return to profitability was largely impacted by the run-off from cutting this business, but that it would inevitably affect GWP.
He said: “If there is an attention point in our first quarter results it is the top line and we will look to address that for the rest of the year.”
And he added: “Looking forward we are optimistic. We will stick to the knitting of the three main lines of motor, household and commercial.
“We’ll continue to work hard in the three channels of broker partnerships and direct. If we have an emphasis it’s that we want to further grow our commercial account.
“Digitally traded business in particular, some aspects of schemes and some aspects of open market are of particular interest to us.”