Markerstudy picked up £6m of GWP from Right Choice following Alpha’s collapse
Markerstudy stepped in to take up £6m worth of premium following the collapse of Alpha.
The business consisted of car and bike policies held by Romford-based broker Right Choice.
Gary Humphreys, group underwriting director at Markerstudy, revealed he was familiar with Right Choice owner Mike Joseph, and that the two firms had done business together for a number of years.
Humphreys said: “Right Choice have long been one of our partner brokers anyway, so when the Alpha news hit they contacted us asking if we could help and support, which we were happy to do.
“They had all the data and we were able to act quickly. It was a good outcome for their customers.”
Lack of expertise
The issue was caused by unrated Danish insurer Alpha filing bankruptcy on 8 May, cancelling all policies.
Humphreys refused to put blame on Right Choice for partnering with Alpha, and said the problem is not specifically unrated insurers.
“The issue is not unrated insurers, it’s people going into markets that they don’t have the expertise in and I think that definitely applied in Alpha’s case,” Humphreys said.
“At the time Right Choice did the deal it made sense for them. It was a capacity arrangement rather than anything else, and their business with Alpha performed well. They were a victim of other people’s failings and not their own.”
But Humphreys did give advice to brokers about what to look for to avoid being a victim of such circumstances in the future.
He said: “Brokers just need to make sure they are placing business with people who understand the risks they’re placing.
“It’s a feature of a competitive market, which the UK is the most competitive motor market in the world, that you are going to have new entrants and capacity coming in from other territories.
“I think it’s more a case of making sure both parties are understanding of the business being written and that’s probably where this one went wrong.”
The new policies with Markerstudy were set up by the date required to ensure former policyholders remained covered. Any new claims incurred before today were met by the Danish Guarantee Fund.
Right Choice will separately deal with arranging refunds from Alpha policies.