Churchill and Direct Line have shaken up the market, now the industry must wake up and follow, says John Jackson

Displayed in every underwriting room should be a notice of the great financial wisdom expounded by the ever-hopeful Mr Wilkins Micawber in Charles Dickens' David Copperfield.

As Micawber - ever the optimist who always expected something to 'turn up' - put it: "Annual income 20 pounds, annual expenditure 19 pounds 19 and six - result happiness. Annual income 20 pounds, annual expenditure 20 pounds ought and six - result misery."

Two insurers that have long adopted the positive end of the Micawber view are Direct Line and Churchill, with combined ratios of 89.4% and 99.3% respectively, the former largely in the private motor market, the latter in household.

Now joined together - but keeping their distinct brands - a major aim is to strip out yet more costs.

Together they are Britain's third largest insurer, and they will continue to show the rest of the market the way forward.

Above all, both Direct Line and Churchill have been competitive. Ask any personal lines broker or insurer. They have shaken up a market that a decade or more ago had been fast asleep.

One can, therefore, only laugh at the so-called 'human rights' group Inner City Press for objecting to the Office of Fair Trading that the combined group is anti-competitive.

As a bunch of silly-billies they take some beating.

Every insurer is trying to get into an underwriting profit, some succeeding better than others. The Direct Line/Churchill approach to customer service has been a major success story, along with competitive pricing.

How can it be uncompetitive if they come under the same umbrella, but continue their separate ways?

Indeed, it is the litigation-mad society, in which the shrill voices of the 'human rights' lobby have been in the forefront, that has led to customers, both individual and corporate, see their premiums go through the roof.

Little wonder that insurers have stopped underwriting heavy loss-making classes of insurance such as liability.

And what has that achieved for competition and customer choice?

For instance, new laws on corporate manslaughter, while clearly socially desirable, will mean yet higher premiums - if you can find an underwriter.

Brokers have fought back in many ways, not least by providing competitive pricing and cover through specialist schemes.

A glance at Biba's 24 member-only schemes reveals an example of how outstanding a success these have been for the industry and the client.

The insurance industry is alive with new ideas, fresh initiatives, and has provided individual and commercial customers with more choice.

The continual shake-up in the insurance market is set to continue. Some of it will not be good for the industry, but other changes will be positive.

Perhaps - and like Micawber I am an optimist - underwriting for profit will become the industry standard.