In the 28 years Duncan Boyle has been working at Royal & SunAlliance (R&SA), he has had a number of international opportunities within the company.
Boyle started his career in 1974 as a graduate trainee and, after qualifying as an underwriter, he spent many years in senior management positions in Australia and New Zealand. Prior to his return to the UK, he filled the position of managing director of R&SA in Australia.
Boyle's appointment as UK managing director of R&SA Commercial three years ago was prompted by the alarming losses being made across the whole of the commercial insurance market.
He spent the first 18 months in his new position implementing his vision for the business and “getting back to basics”.
“There was a need to fix the business, get the result right and to re-price and re-underwrite,” he says. “Now, we are focusing on claims and core skills and investing more in people and technology.”
A look into the future
In terms of rates, Boyle predicts that the current hardening climate will persist for some time. While new entrants, such as e-sure and Bluesure are starting to appear on the market, it is his view that they are unlikely to pose a threat.
“We have not seen the end of the hardened market and will not go into anything like a price war for a few years,” he says. “New entrants can come and go and this is healthy. But they need to have a means of competing on price that is well thought through.”
He feels strongly that higher reinsurance costs, rising claims costs and compensation culture will keep prices high, hitting insurance customers hard in the pocket. “People are now more inclined to claim and we have different types of claims coming through that we would not have even considered a few years ago – such as stress claims and very large property claims,” he says.
“From a customer point of view it is worrying – society needs to decide if it wants to see litigation leading to higher prices. I am not in favour of the compensation culture and the belief that for anything that happens, someone has to pay for it.”
The collapse of Independent, says Boyle, has highlighted how much claims costs are spiralling out of control and the fact that insurers' prices must reflect this.
Boyle believes the collapse of Independent is a classic example of an insurer failing to get the price right.
Taking over Indie business
R&SA has done well out of Indie's failure, taking on £100m worth of new business, £60m of which is on the commercial side.
The company has also added Property and Casualty Services (PCS), Independent's loss adjusting arm, to its list of acquisitions.
Boyle says the move was part of R&SA's strategy to have its own in-house assessors.
He says: “No longer is claims a forgotten part of the business. We have always thought of ourselves as the best of a not very good bunch, so the acquisition of PCS was an opportunistic thing.”
However, he stresses that, contrary to reports, R&SA still plans to keep a panel of professional assessing firms.
R&SA is increasingly using technology to help with the claims process. Claims staff now use text messaging to communicate with customers and fleet drivers about their claims' progress.
Concentrating on the customer-facing side of the business has been very important for R&SA, particularly in light of last autumn's floods.
The company prided itself on the way it responded to the crisis and has had a great deal of positive feedback from customers.
But Boyle believes those whose homes are frequently subject to flooding could see their buildings and contents insurance premiums rise when the Association of British Insurers' (ABI) two-year moratorium on price hikes is over.
“The premiums should reflect the risks,” he says. “Those whose homes do not sit on flood plains should not pay the same as those whose house does.”
In Boyle's opinion, the government has a major role to play in making sure that premiums do not go through the roof, by improving flood defences to avoid further catastrophes.
In terms of the future for R&SA, the long-term strategy is to continue to grow the business organically. “We are well positioned to develop new business propositions, having not had a merger for a while,” says Boyle.
He is optimistic, too, about the future of the market and says there are better times ahead, as long as the market concentrates on underwriting results.
He says: “People need to know how to price a risk – we forgot those skills three or four years ago and now need to rebuild the fundamental principles.”