The background to Quinn's provisional administration – and the market's reactions
This is the second time the market has been abuzz with chatter about Quinn. The first time was late afternoon on a Friday in November last year, when a rumour went round like wildfire. The phones at Insurance Times were ringing off the hook as speculation spread that the Irish regulator was about to take some form of action against Quinn. But despite the strength of the rumours, nothing ever happened – until now.
Quinn has been courting controversy since it first opened its doors in the UK in Manchester in 2003. It was investigated by the Department for Work and Pensions in 2004. And at the end of 2008, it made headlines after being handed a €3.25m (£2.89m) fine by the Irish regulator. It was punished for making “unauthorised loans” of €229m to other Quinn family companies to buy the shares in Anglo Irish Bank.
Sean Quinn was personally fined €200,000 and stepped down from his role as chairman and director of the insurance company.
This was followed in January by a reorganisation of the insurer’s board, which the company said was designed to make it “more independent of the wider Quinn Group” and “resemble [the corporate governance structures] of a publicly listed company”.
Alarm bells started ringing when Quinn withdrew from Moody’s credit ratings in July 2008, leaving it without an official rating – a move that discomfited Biba and other trade bodies.
The Royal Institution of Chartered Surveyors removed Quinn from its list of approved insurers as a consequence. In an exclusive interview with Insurance Times in September 2009, Quinn Insurance chief executive Colin Morgan defended the policy. He said: “We didn’t believe we were going to get an ‘A’ rating because of what was going on in the world at the time. We weighed up the costs and benefits of having the rating, and we’d been in the market before without it, so we took the decision at the time to withdraw.”
That decision cost Quinn its relationships with a number of brokers. Since those rumours back in 2008, even fewer have felt comfortable doing business with it – and rivals have been waiting anxiously for the Irish upstart to get its comeuppance. This week, they got their wish.
Buy cheap, buy twice, say vindicated brokers
“There is a God – and he’s not Irish,” laughed one broker. This sentiment was echoed across the market when the news broke that Quinn Insurance had gone into provisional administration following intervention from the Irish regulator.
The insurer, so long the bête noir of the UK insurance market, has now been emphatically booted out – and while some brokers have been caught out, rival insurers at least are rubbing their hands with glee.
Brokers tend to fall into two camps: one group used Quinn as a market because of its unbeatable prices; the other actively advised clients against it. The first group has been vindicated – and is pleased as punch about it.
“We’ve never used Quinn as a market, and where we have taken over brokers that have, we have gone in and told the clients that they are not a preferred insurer,” one such broker said. “We’ve never worked with them because of the concerns about them – and it looks like we were right.”
Brokers that had happily placed business with the controversial Irish insurer, which started in the construction sector before branching out more widely, were less vocal – perhaps unsurprisingly.
There was a general consensus that this could turn the market, or at the very least have a significant impact on rates.
“This is a significant development in terms of capacity,” said one rival insurer. “I would like to think this is the door to a hardening market.”