Weekly briefing: 5 - 11 August - A week to set the industry reeling

Our coverage of the rioting across the UK has been vast and varied. We have paid particular attention to the potential losses being suffered by insurers and businesses as a result of the widespread disturbances seen across the country. We revealed that Zurich was the insurer for the Carpetright building that was set ablaze during rioting in Tottenham on Saturday. This could cost the insurer up to £10m, sources said. Meanwhile, Allianz was confirmed as the insurers for an Aldi store also gutted by fire in Tottenham. It has £4m of cover with the insurer.

The riots caused a number of sporting events to be cancelled, including an international friendly between England and Holland, which was due to be played on Wednesday evening. Our story detailed how the Football Association was forced to cancel the event without any contingency cover.

Saxon East: Storm in a third-party tea cup?

Where do all the claims emanate from? Whether it be credit hire or personal injury, Ageas has now taken a big step towards answering this question by asking brokers to reveal third-party arrangements. It’s a logical step for Ageas, and I doubt there will be that much opposition from brokers. At the end of the day, if a broker spews out terrible loss ratios, many insurers will just load the rate or cut ties completely. I doubt the move by Ageas will change the relationship much, but it might help its claims department deal with claims more effectively. If Ageas had demanded brokers hand over all third-party referrals, that would have been a big step. As it is, the whole thing seems like a storm in a tea cup.

The barbarians are at the gates. AXA shares tumbled 10% as hedge funds in the USA and speculators bet on a disintegration of the euro. We’re a long way from that but the panic is not unfounded. Money men are rightly asking how France can pay to bail out Italy, Spain, Greece, Portugal, Ireland and probably Cyprus without damaging its own credit rating. AXA holds Italian, Spanish and French government bonds meaning it’s in the firing line for bond vigilantes. If government bond prices dramatically fall, it could then feed into AXA’s balance sheet, eroding shareholders’ equity and the solvency margins of what is currently a sound company. All this is happening at a time when Solvency II is meant to beef up insurers’ capital requirements. Perhaps the euro crisis is the real reason why Solvency II was delayed for a year?

Ben Dyson: Zurich shows us how it's done

This week provided further evidence that corrective underwriting and pricing, while temporarily damaging to revenue growth, can significantly improve underwriting profits. Zurich’s efforts to turn around its UK personal lines motor book have clearly borne fruit, judging by second quarter results. The company’s underwriting profit surged 450% to $22m (£13.5m) in the first half of 2011 from $4m in the first half of 2010. The insurer’s combined ratio is broadly in line with those of its major competitors, its 98.4% coming in slightly better than RSA’s 98.5%, but slightly worse than Aviva’s 96%.

One thing that is unclear is how much reserve releases contributed to this result. Zurich said that reserve releases were one of the factors helping its Europe-wide improvement in underwriting profitability, but did not give this level of detail at the UK level. Similarly, RSA has given no specifics about UK general insurance reserve movements. Only Aviva disclosed reserve movements, revealing that it added £12m to UK GI provisions in the first half. This is, of course, only the half-way point. The real proof will be in the full-year results, when the impact of the riots, plus any winter weather, will be known. We already have some indication of Zurich and Allianz’s riot exposure, but what will the wider market impact be?

Sam Barker: Cameron confirms compensation rights

The 1 October renewal date for solicitors’ professional indemnity insurance is approaching, and this week saw Chartis UK announce it would stop writing new solicitors’ business to focus on renewals. However, the insurer would consider going back to writing new business for solicitors if some criteria are met. Top of the list would be a better claims experience, said Chartis vice-president of financial lines Steve Bonnington. Other criteria are a pick up in house prices, the abolishment of the assigned risks pool and a healthier global economy, he added.

David Cameron has promised that the government will give police funds all the cash they need to pay for legitimate riot claims. He said the ABI now expected the cost of claims to be around £200m. Speaking in the House of Commons, Cameron said: "On repairing the damages, I can confirm that any individual, homeowner or business that has suffered damage to or loss of their buildings or property as a result of rioting, can seek compensation under the Riot Damages Act, even if uninsured."

Cameron also extended the deadline for claims to be received from 14 to 42 days.The announcement and the extension will be a great relief for the industry, but now they have an new concern: proving that claims can be refunded under the terms of the act. A riot is defined as "12 or more people threatening violence for a common purpose, causing people to fear for their safety". Compensation can be claimed for "any house, shop or building which has been damaged, or had its contents damaged, by any persons riotously or tumultuously assembled together".

Having the right to claim is one thing, but proving the legitimacy of a claim is another. This will run and run.