Patrick Snowball, managing director of Norwich Union (NU), has announced a massive rationalisation programme to avoid dying “death by a thousand cuts”.
Delegates at the insurer's inaugural roadshow in Bristol heard how the insurer will slash the number of products it underwrites from 300 to 65 as of January next year. And key areas of the group's business, including Sabre, Planet and Bonus, are also under the microscope.
Addressing a room packed with brokers at the Bristol event, Snowball said: “If we can't be a top-five player in whatever we do, then we will withdraw from that market.”
He also gave a strong hint that the company will massively cut back the amount of high-value (£100,000-plus premium) commercial property business it writes.
“I have ordered a review of commercial property over £100,000,” he said. “We are bleeding badly and I can see no way over the next year of turning that around. It would take two or three years, but I don't have two or three years.
“We have got the skills to write business in areas in which we are confident. But we can't take another death by a thousand cuts over the next three or four years.”
Senior figures at NU claim it will continue to write high-value commercial property business but with a much more cautious approach.
Another division that faces a turbulent few months is specialist motor division, Sabre. The niche insurer writes around £60m in premium income and was flagged up as one of those under review.
Marketing and public relations manager James Duffell said: “When we merged, Sabre was billed as
non-standard motor business. But it is primarily a non-comprehensive business.”
NU believes this means Sabre is not such a good strategic fit as was first thought.
“The questions are: do we want to stay in that business, what is the best way of making money, or should it be a separate brand?” he said. “These are decisions that are being taken at the moment and will be announced over the next three to four weeks.”
But he claimed the Planet and Bonus reviews would be more “benign”. Both services place underwriters in brokers' offices to allow on-the-spot risk acceptance.
Duffell said: “It may be that we use different methods to deliver the same thing. At the moment, there are underwriters in brokers' offices. The question is, is there anything else we can do? Can we help with IT platforms in their offices, for example.”
Insurance Times columnist and CGU's ex-head of broker relations Tony Cornell said the NU faced a mammoth task to migrate policyholders onto the new streamlined book.
“The transition period will be awful,” he said. “There are Commercial Union products that go back to the Thirties that have never had their wordings updated.
“The old CU people and General Accident people just ran way from the problem because it was so vast.”
Institute of Insurance Brokers (IIB) supremo Andrew Paddick claimed any significant changes would leave gaps in the market for NU's rivals to exploit.
He said: “It may create opportunities for other businesses if they are going to start setting business criteria like this.
“I think there is still enormous over-capacity in the market so I don't believe the tactics of any one insurance company have a long-term effect. It may have a short-term disruptive effect, but from a bottom line profit point of view, let's wait and see.”
British Insurance Brokers' Association (Biba) technical services manager Peter Staddon said: “The products coming through have got to be best of a breed and have wider wordings than the ones they are replacing. If they are not, brokers will have to consider moving their clients elsewhere.”
