Road Runner chairman Mike Slack has angrily rejected complaints by intermediaries that his company is not covering the cost of transferring policies from Independent Insurance to Royal & Sunalliance (R&SA).
Road Runner had 1,400 brokers in its scheme with Independent and an even larger personal lines portfolio with the failed insurer. Slack said Independent's collapse had cost the company "a fortune".
Alpha Insurance Brokers boss Colin Sutton was among the brokers to complain that Road Runner owed intermediaries a duty of care to pick up the pro-rata costs of transferring the policy before the renewal dates.
Sutton said his company was picking up the bill for its clients and "as a goodwill gesture, surely Road Runner should pick up the tab for at least half of the additional premiums now required".
Michael Wilson, who has a personal motor policy with Road Runner, also complained that the company had charged a £20 administration fee for each policy it transferred to R&SA. Wilson said he was already paying an extra £165 set by R&SA on his policy.
Slack confirmed he had received a number of similar complaints from scheme intermediaries, but his company could not afford to cover the extra costs.
"The intermediary channel, or most of it, has said it's our fault and that we should deal with it," he said.
But he said Road Runner had already spent at least £20,000 recovering from Independent's collapse, including £5,000 on a new computer system, £8,000 for a 24-hour helpline, plus the cost of staff working overtime every evening and weekend and communicating the changes to clients.
"It's a serious situation and we took the view that we've got to survive ourselves," Slack said.
"R&SA won't take the business for nothing, there's a considerable sum of money involved and we're just not able to do it."
He said Road Runner had not exercised pressure on brokers to accept the new deal. "We thought it was the responsible attitude to take, to offer it pro-rata and if people don't take it, we don't mind," he said.
Slack said customers who felt strongly about the £20 administration fee would not have to pay it.
An R&SA spokesman said that there would not be a widespread rise in personal lines premiums, despite Wilson's experience, because Independent had priced personal lines policies much closer to market rates than it had for commercial policies.
Commercial policyholders are experiencing rises of up to 50%.
"There may be pockets we consider underpriced but there isn't anything like that going on across the board," he said.
