Exit from £65m book will affect 300 brokers
RSA is withdrawing from brokered personal motor business in the UK because of “extreme” competition.
The insurer will stop accepting new or renewal personal motor business through the broker channel in November this year.
The business accounts for £65m of gross written premium – around 7% of RSA’s total UK motor portfolio.
The exit will affect around 300 brokers, although RSA’s managing director of personal intermediated business Mark Allan said that the insurer does not expect to fully exit any more broker relationships as a result.
Allan told Insurance Times: “Our intention will be to reduce the amount of business we write with those 300 brokers by exiting the motor piece but we don’t envisage exiting any broker relationships.”
The news closely follows comments from RSA UK and western Europe chief executive Steve Lewis that RSA was struggling to compete in brokered personal lines motor in particular.
RSA reported an overall personal motor combined operating ratio (COR) of 113.6% in its first-half results last week - almost 11 percentage points worse than the 102.7% it reported in last year’s first half and much higher than its peers’ comparable ratios.
Lewis said in response to the results that the UK regional broker market was RSA’s biggest challenge in personal motor.
Allan backed up Lewis’s comments, saying that brokered personal motor was the toughest area of a generally difficult business line.
He said: “Our experience says that this particular segment is at the extreme end of the competitive scale.
“We haven’t been able to make it work successfully for ourselves or, to be honest, for our brokers.”
He noted that accounting firm EY had predicted in June that motor insurers would collectively report a COR of 105% for the full 2015 year.
He added: “We think our time would be better served doing a great job on home and trying to grow that product, where we think the outlook is much more positive.”
Despite the exit, Allan said RSA was still committed to motor business in other channels. Commercial motor, including the Motability account, is completely unaffected by the change and will continue to be written through brokers.
RSA will continue to write personal motor directly through its More Than brand, through affinity partnerships such as the one with car manufacturer Volvo, and through its underwriting agency Oak Underwriting, where the capacity is provided by Chaucer.
He added that the company would also continue to push forward with its telematics products.
Allan also said that exiting brokered personal motor would allow the company to devote more time to developing brokered home business.
He said: “We have got a strong personal broker home business. We think by making this change we can become even more focused on that and really start to grow that going forward.”