Stockwatch

The week's winners
Windsor up 1.7%

The week's losers
Wellington Underwriting down 16.8%
SVB down 10.5%
Aon down 8.1%

Put yourself for a moment in the shoes of a Norwich Union (NU) claims worker.

The company is dedicated to improving customer service - and that means better claims handling and the promise of investment and training.

Its general insurance operating profits were up 133% last year. The market is harder than it has been for years. And senior managers say the outlook is great. But you're one of 750 people facing redundancy.

What's more, the shares you bought in the company you work for are at a seven-year low.

This is no fictional scenario - it's the situation many people found themselves in last Friday.

Group chief executive Richard Harvey has been hearing so much discontent from within the ranks about the share price he tried to bolster morale.

Unfortunately for him, his words on the company intranet ("The market will form a view of our share value, based on our results and many other factors affecting business outlook...") very quickly came back to haunt him.

His logic and intentions may have been faultless but, within days, the company was announcing the job cuts and the share price was sliding.

His conclusion that "we all need to tough it out with hard work" added insult to injury for those NU staff who will no longer be able to work for the company.

With about £4bn wiped off insurance company values last week, the pain is universal.

The slump in share prices hurts all parts of the insurance sector, which owns about a quarter of the stock exchange and desperately needs investment income to pick up this year.

Indeed, the share price of Royal & SunAlliance (R&SA) sank to a ten-year low at the same time as CGNU was suffering.

As the FTSE slumped to a yearly low, the only consolation for the sector as a whole was that it was lagging behind IT and media in the headlong plunge.

In fact insurance software outfit The Innovation Group (TIG) was one of the worst hit, losing 30% in early trading last Thursday. R&SA's decision to cancel its One Stop claims management system, revealed exclusively in last week's Insurance Times, can't have bolstered confidence.

Ironically, R&SA owns a chunk of shares in TIG and can't have been too pleased to see their value sink.

It is said to have paid close to £1.50 a share. Fortunately, TIG stock made a partial recovery, and stood at 90.75p on Tuesday.

The danger to all insurers is that the current bear market - described by Richard Harvey as the "toughest bear market I can recall in 30 years" - will undermine whatever progress the industry can make on underwriting as well as wiping millions off the funds insurers have to write cover.

That's a real danger threatening all insurers and all their staff.