Insurer refuses new construction business from hundreds of brokers

Zurich has turned away from heavy construction business, threatening to cut its new business facility with well over half of its 1,200 construction brokers.

Last week construction manager Carl Gebhard wrote to 750 brokers, telling them that Zurich would only accept new business from them when it already held an existing line of business from the client.

Gebhard said the brokers were chosen on the type of construction business they placed with Zurich and the quality of their client's risk management.

He said that Zurich had introduced a new rating mechanism for more than 60 trades and found that house and flat building, light construction and the finishing trades were the most "attractive".

Gebhard said that Zurich had chosen the brokers it would continue to do business with on the level of their construction specialisation.

"We did research with construction businesses in the past six months and they want to work with specialist brokers," he said.

"Ninety percent of our construction business comes from 20% of our agency base."

However, Gebhard said Zurich had not totally ruled out working with the 750 brokers.

"If they can demonstrate that they do specialise in a particular area, we'll be happy to talk to them," he said.

"I'm hoping this letter will kick start people into action."

Gebhard said Zurich had not set a limit on how much business it would write.

Gebhard's letter came soon after the launch of Zurich's three new construction centres in response to the hard market.

"Zurich has been far from immune to the issues affecting the insurance industry and the introduction of these centres has been brought about by the need to remedy the results experienced in the construction trade sector," he wrote.

"As such, we are unable to provide a new business facility to you at the present time while we handle this difficult task."

One broker who received the letter said Gebhard's letter had not communicated to brokers that Zurich was targeting particular trades.

"It's as curt and cold a letter as you can get," he said. "Why are companies not straight with brokers?"

He said that he did hold the business Zurich had targeted, with another insurer, but that he would not bother contacting Gebhard to ask for his agency to be re-established.

"It's hardened my attitude to Zurich now," he said.

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