Insurer willing to help clients self-insure to keep retention rates steady; meanwhile, rate rises and cost-saving measures continue
RSA announced a 3% drop in overall UK premiums to £1.98bn for the third quarter of this year, as clients felt the impact of the recession.
In an interview with Insurance Times, RSA’s commercial managing director, Paul Donaldson, said that client exposures had fallen by around £200m in the first half of the year. In the UK, the mid-market has suffered most, with exposures down between 4% and 16% over the past 12 months. Globally, net written premium was up 4% to £5bn.
Donaldson said that retention rates had remained steady as the insurer worked with clients to cut costs, through an increase in self-insurance, for example.
He said: “It’s incumbent upon us to explain our story even more deeply and, yes, clients might decide to take a bit more risk to reduce their price and we are happy to work with them on that basis.
“A lot of our business is mid to high end, and we’re working with those high street names we insure, working out the best solution on a bespoke basis for them and for us. It might be that they take more risk and we insure less to come to the right answer.”
He added that RSA continues to hold a steady line on rate increases: “No doubt rates are under pressure all the time, but we have been consistent in what we’ve done for over two years.”
In the third quarter, RSA achieved a 7% average rate increase in personal motor, and 4% in household. In commercial, rates were up 8% in liability, property and motor.
In a statement to the Stock Exchange, the insurer said: “We are maintaining our strategy of pushing rate, targeting profitable growth and selective capacity withdrawal where we cannot achieve target returns.”
In UK personal lines, premiums increased by 1% to £829m, with new affinity deals and growth in broker products offsetting falling household and motor policies. In commercial, premiums of £1.15bn were 5% down on last year, with lower premiums in commercial motor schemes and
the mid-market segment offset by strong performances in specialty lines, including risk solutions and marine.
RSA said that it was on track to achieve the £70m cost savings by the middle of next year, announced at the full-year results in February.
Of the targeted 1,200 job losses, 1,050 posts have been identified and 650 staff members have already left the business.
Group chief executive Andy Haste commented: “We have produced another robust performance with our net written premium again demonstrating the resilience of our strong and diversified portfolio.
“While economic conditions remain challenging, we are now seeing some encouraging signs, particularly in international and emerging markets.”
He added: “We are well positioned and taking the right actions to successfully manage through the downturn and take advantage as conditions improve.”