Zurich chief goes on air to call for hardening

David Smith, Zurich's UK managing director of general insurance (broker division) spoke to PB last month at Incisive Media's On Air television studio about the need to harden rates now in order to avoid larger premium swings at a later date. Smith recognises that it is a difficult time to increase rates but thinks it absolutely necessary to start now to be in line with increasing claims, fraud and arson costs and widening regulation.

Smith said: "It is a very positive message to communicate to a customer: stable pricing for the future. The last thing a broker wants to do is go to a customer and provide them with a cheap price this year and then go back next year with a 30% increase. Some people will have to take the lead." When asked if the current need for hardening was part of the usual insurance cycle, Smith admitted there were additional pressures this year but argued that commercial increases of 5 % to 8% were acceptable.

Smith also explains how he divides his time between the UK and mainland Europe in addition to providing analysis of Zurich's half-year results and his opinion on consolidation.

He spoke also of the "reality" of the difference between new business and renewal pricing, warning that it should not be "disproportionate" and that new players could be under-pricing by taking on too much new business.

In a challenging environment, especially for the larger insurers, there will be many rivals hoping his message is converted into meaningful action.

Read the book Rate Hardening Explained here.