The government's public spending cuts may be necessary, but the industry will feel it along with everyone else
By the time this week’s Insurance Times is on desks, the entire country will be waking up to a new era following the biggest public spending cuts since Lloyd George was prime minister. Many fear that chancellor of the Exchequer George Osborne’s deficit reduction plan will choke back economic growth, potentially tipping the UK back into recession.
They don’t include Peter Cullum; the Towergate executive chairman was one of 37 business leaders who signed Monday’s letter urging Osborne to hold his nerve as private business would fill the gap. But the UK economy’s deep reliance on the public sector means that some fall-out is inevitable from the cuts, with knock-on consequences for the insurance sector.
Amid the encircling gloom, this week’s Insurance Times contains a rare good news story, for brokers at least. Aviva’s decision to award an extra 3% commission to SME brokers should be a handy Christmas stocking top-up for those lucky souls whose businesses are selected by Janice ‘Santa’ Deakin. Many will say that by ramping up its incentives in this way, the UK’s largest insurer is merely pursuing the old game of chasing volume over profit in order to appease shareholders. Deakin is anxious to dispel the impression that she is chasing market share at all costs, by pointing out that she’s only interested in profitable business.
Nobody at last week’s Global Leaders Forum dissented with Willis president Grahame Millwater’s prediction that the market was unlikely to turn until the beginning of 2013. But in the tough conditions expected over the next two years, the fight for growth is likely to get more bloody. IT