Chief executive Manchester says he’s not in the market to lose money
Charles Manchester believes professional indemnity insurers aren’t watching their bottom line and the market is currently gripped by “madness”. The chief executive of Manchester Underwriting Management (MUM) said his new business will have to write cautiously in its first year because of market conditions. “In the PI market right now, 95% of insurers have a book of business that is losing money, and what they’re doing is increasing their distribution costs and reducing their rates on a book of business that is probably losing money across the market.
“There are bits that will be making money, but in the market as a whole, the lack of discipline is such that they’ll all be losing money. And what’s happening is that more insurers are coming into it, so it isn’t going to get any better in the short term.”
MUM starting writing PI this month and is backed on paper by Lloyd’s insurer Amlin. Manchester said MUM has a long-term game plan, and it didn’t need to grow aggressively in the first year. “It is going to be tough while the market is mad, but once the market gets out of its madness, then we’ll be ideally placed to support Amlin’s business. The people who have backed me in Amlin have backed a strategy we have for the market cycle, not something we are going to do in the next six or 12 months in isolation. We’re not going to write business to lose money. We have to add to what is out there in the market.
“We believe we’ve got the expertise to write the business, because we’ve got quality people with a track record. Plus, we’ve got a lot of broker relationships where the brokers who know us realise that not only do we do deals and are disciplined, but will be good people to do business with.”
Manchester was chief executive of HCC Insurance Holdings’ UK subsidiary, and also active underwriter of HCC’s Lloyd’s Syndicates 4040 and 4141, before leaving in 2008 to eventually set up MUM.
Manchester said his company would stick to PI to begin with, but would later branch out into other areas of insurance.