Chief executive remains "very disappointed" in lack of response to inadequate commercial rating levels
Groupama Insurances chief executive Francois-Xavier Boisseau has blamed claims inflation for Q2 ’09 profits that have more than halved year-on-year, to £5.4m, from £13.1m in 2008. The insurer posted stable revenues of £225.9m (2008: £224.7m). It refused to disclose its combined operating ratio.
Boisseau predicted a stronger second half, and repeated his calls for the major commercial insurers to increase rates. “As we expected, the first half of 2009 has been very challenging and, although the business has generally continued to perform very well, our profitability has suffered as a result of a combination of unprecedented claims inflation and some poor performing schemes affecting our core private car portfolio.
“As ever, we are always prepared to sacrifice volume to safeguard the bottom line, and the underwriting and pricing action we have taken, coupled with an improving rating environment, is already applying the necessary correction. These changes should result in a stronger second half.”
Across the insurer’s book, private car income reduced significantly because of rating action, while commercial lines and private mortgage insurance remained under pressure because of the continuing soft market and fierce competition for SME business. The household, motorcycle, fleet and travel portfolios performed well.
Boisseau commented: “The growing level of claims inflation that we have seen in our personal motor book over the first half of the year has been significant. This is as a result of the continuing impact of credit hire and the aggressive claims-farming activities by direct writers and some brokers that have continued to drive up the number of injury claims. We have responded strongly and I am comfortable that we will soon be back on track.
“With the exception of private car, our business has performed very well and there have been some sparkling performances from our household, motorcycle and small fleet accounts, where we are building a growing reputation for excellence. This bodes well for the future.”
Boisseau then turned his attention to rates. “I remain very disappointed that the major commercial players are still not reacting to the wholly inadequate rating levels in the commercial market and that we are still seeing differential pricing for new business and existing customers. There has again been plenty of talk in the market over the first six months of 2009 about increasing rates but very little action. This needs to change.”