Hiscox has stopped writing new commercial property owners' insurance policies.
In a letter to brokers dated 8 Nov-ember, Hiscox chief executive officer Bronek Masojada said: "As a result of a strategic review of our business areas, Hiscox has decided to withdraw from underwriting commercial property owners' insurance with effect from 1 January 2002.
"Hiscox's retail strategy is focused on covering high volumes of specialist risks, where we have a leading market position, together with the best distribution, systems and reinsurance cover in place. Unfortunately, we have not been able to generate sufficient volume of property owners' business to achieve a leadership position in this area."
Half of Hiscox's ten commercial property staff will be made redundant. The £10m account's run-off will be handled by existing offices and claims will be managed by a 24-hour helpline. The news comes as the sector faces huge reinsurance rate hikes after 11 September losses.
Rate increases of up to 150% are hitting the market. Groupama commercial lines property manager Malcolm Smith said: "Generally, rate increases are up 20%-100%-plus, depending on the type of risk involved and the size. Reinsurers have also increased their premiums by a massive degree."
He said risks that Groupama was placing facultatively with reinsurers had seen pricing increases of "50%-150% or more".
Treaty reinsurance, which is the backbone of the company's commercial property book, is under negotiation and rate increases are expected to be "very substantial".
Meanwhile, Allianz Cornhill International has revealed it will not be renewing its three-year contract with Towergate Commercial, which expires in May. Towergate is the sole underwriting arm for property owners' insurance at Cornhill.
Cornhill spokesman Mark Bishop said: "It [Towergate] is not considered to be part of our ongoing strategy, but we are still involved in property owners' business."