Pay As U Claim, a radical new scheme that caused a furore amongst brokers when it was piloted three months ago, has found two new backers, writes Paddy Gourlay.

But the scheme, which front-loads a 50% no claims discount on to premiums, will not be relaunched this year, said scheme managing director Steve Burrows.

Initially the scheme caused a storm amongst south-east brokers, where it was piloted, who imposed sanctions in April – including refusing new business against the two original backers, AXA and Lombard. Brokers felt the scheme would perpetuate soft market conditions.

AXA pulled out within a week, while Lombard weathered three months of hostility until the pilot finished at the end of May.

Burrows said both AXA and Lombard have withdrawn support for the scheme, but told Insurance Times this week he was negotiating with two new underwriters.

"The scheme will not be back on to the market for some time, " he added.

"Before we can move, we need to find a balance which will be palatable to the broking community and clients.

"It must not cause the same furore as it did the first time."

If the scheme is resurrected, it is likely to offer a lower discount and be open to other brokers to sell.

Pay As U Claim, set up by Croydon-based brokers Burrows Keith, initially offered a 50% discount up front for property-based commercial premiums on the proviso that policyholders would repay the full amount if they made a claim.

Clients were tied into three-year fixed-rate contracts. Premiums were set higher than market rates and businesses had to implement strict risk management improvements.

Only the top end of the market, about five per cent of business, would have qualified.

Meanwhile, Burrows said he will be launching another scheme, unrelated to Pay As U Claim, which he believes is as innovative, but less controversial.