I was saddened to read the comments in your publication attributed to Julian Hance, the finance director of Royal & Sun Alliance (R&SA).

Although we are a competitor, I have taken no pleasure from the troubles of R&SA. Two once great British institutions have been reduced to a very poor condition indeed. It could have been so different.

From Hance's comments it looks as though another questionable decision is about to be made. He implies that under-performance in personal lines is being blamed on brokers, justifying a move "away from intermediated and towards direct".

Any broker will be able to tell you that if R&SA is getting bad results in the broker channel, it has nobody to blame but itself. Bad underwriting - in particular, I suspect, the launch of its Drive product for motor - will be the cause.

I know that, at the time, brokers were very concerned about this product. Many told R&SA quite forcibly that it had its rates wrong. However, it would not listen.

It is quite clear from the results of companies such as NIG, Fortis and Cox that there is good money to be made in the broker market. You just have to know what you are doing, and listen to the brokers.

Now it appears that R&SA thinks that direct is the place to be. Well, this is a tough marketplace. If it really think that it will be any easier competing against Direct Line, Churchill and the major retail brands, then it should think again, before it is too late.

Like me, most brokers still have a lingering affection for R&SA, which is not an asset possessed by the other big British-owned insurer. Desert the broker channel now, and R&SA really will be in the wilderness, and will deserve to be.

Phil Bunker
Managing director

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