Managing director for partnerships Mark Holweger says prices need to turn in 2016 for insurers to maintain consistency.
Mark Holweger, managing director, partnerships, at Legal & General (L&G) has highlighted the importance of insurers pricing for long-term weather following the release of the company's results for 2015.
L&G reported a profit of £51m for its general insurance unit (2014: £59m) and a combined operating ratio (COR) of 89% (2014: 87%).
Holweger noted the provider had "delivered a strong profit performance".
He told Insurance Age: "It has been driven primarily by our pricing, effective claims management and also a continued drive around digitalisation of our business and driving efficiency and cost saving into our business.
"The other thing is that we're willing to let business go if we feel that it's not sustainable from a profit perspective and I think that has been a key to driving and maintaining our profitability."
Meanwhile, the company's results showed that it had lost £15m following the three major weather events in 2015.
"We would say that it was a normal year and that this is what you expect in the UK," Holweger commented.
"And actually, to a certain extent it wasn't even that bad of a year, which is why we have delivered such a strong COR again in 2015."
He added: "Long-term weather needs to be in your pricing and despite some more severe weather than we've had in previous years L&G were still able to produce this really strong result."
According to Holweger, pricing in the home insurance market will need to change in the coming year for insurers to be able to maintain consistent pricing for customers.
"People need to price for Flood Re, which will be coming in this year," he said.
"You have got claims inflation as well which people need to price for. And the reality of it is that it was a wholly competitive market in 2015 with prices really under a lot of pressure and I think that during 2016 that does need to turn."
Looking ahead, Holweger said the insurer's focus would continue to be on sustainable pricing and digitalising the business.
"We are introducing things like customer self-serve and looking to reduce some of the questions to go on cover for home insurance, which makes it simpler for intermediaries and also for the customer," he added.
"Where we see an opportunity for profitable growth we will look to maximise that opportunity. So you will see us announcing further new affinity deals in 2016."
Holweger noted that the company had started to underwrite pet insurance and was looking to expand further in that area.
He said: "Likewise we will continue to look for other opportunities to develop our product range.
"We are also broadening our home offering and we're pushing hard in buy-to-let in the broker distribution market."
According to Holweger, one of the major issues impacting the insurance sector in the near future was the speed of digitalisation and changing consumer behaviour.
He concluded: "This will continue to pick up pace and you need to have your finger right on the pulse, investing now, to make sure your business is geared up for how intermediaries and their customers are going to want to interact."
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