The specialist motor insurer aims to capitalise on market withdrawals by some of its competitors
Specialist motor insurer ERS aims to capitalise on the recent MGA exits by offering brokers a safe haven for their business, chief executive Ian Parker told Insurance Times.
ERS - which has been trading for 73 years - is the only Lloyd’s motor underwriter and offers 30 products ranging from horse boxes to prestige cars.
It trades entirely through brokers.
”Brokers are looking for better security now because of [MGAs] exiting the market. They want to be sure that their insurer is going to be there. Being at Lloyd’s gives us the A+ rating that it has, which holds us in good stead,” Parker said.
”Some of our competitors are motivated by different things than we are. We trade against a lot of MGAs who don’t carry the risk themselves.
”That’s an area where we are seeing people exit the market.”
”Opportunities are going to come from continuing exits from the market. The work we’ve been doing in recent years to cement our franchise has brokers seeing us as the go-to place for specialist motor risks, Parker said.
The insurer reported a record £13.9m profit last year, but also saw its combined operating ratio (COR) go up from 96.1% to 99.7% year on year.
it also saw a 13% year-on-year increase in vehicles on cover and GWP of £360m (£330m in 2018).
He gave three reasons for the decline. Firstly, claims inflation was much higher than ERS and the market were anticipating, which Parker said was ”an accelerating and continuing trend” of the last few years.
Secondly, the unexpected Ogden rate change took its toll on the business, which Parker said should not be a factor again for the next four years.
Lastly, Parker said the business was growing quite quickly. ”New business never performs as well as renewing business. you don’t know the new risk quite as well,” he said.
”We’re in a strong position compared to a lot of our competitors, but the market is still very tough,” he said, adding that he expects that customers are going to see significant rate increases through the year.
‘Selling a tenner for a fiver’
Parker insisted that the company is interested in bottom line rather than top line growth, with the emphasis being on its underwriting strength.
”We’re growing carefully and in a considered way. We’re not putting any underwriting profit at risk by trying to grow quickly. But we are seeing more enquiries than we were last year.
He said the growth can come from one of two ways: either doing things very well and being consistent, or by ”selling a tenner for a fiver”. ”We’re certainly in the former of those camps.”
”We have to make sure we maintain our discipline. These companies haven’t been exiting the market because they’ve been making a tonne of money, Parker said.
ERS has been owned by US private equity firm Aquiline since 2013.
ERS prides itself on being the biggest motor underwriter in Lloyd’s, but he said the business is very A-typical of a Lloyd’s syndicate.
While Parker applauds John Neal’s modernisation efforts, most of the proposed remedies such as electronic placements, speedy settlement of claims are already features of the motor market.
”Many of the innovations they are talking about won’t affect us. Our operations are very different to the core Lloyd’s market.”
Subscribers read more
ur COR%. We have strong underlying performance and in investments we’ve made in infrastructure and technology, we have the foundation in place to achieve our goals and continue to build a track-record of results. We fully expect to continue to drive stable, profitable premium growth”.