Against the grain

Despite dissenting voices about the future of intermediated personal lines, Fortis, following a profitable year in 2003, aims to steadily pursue this model, according to ex-Royal & SunAlliance broker and affinity schemes director, Chris Dobson.

"The company is in a strong position because it doesn't have any baggage - unlike some," Dobson says, adding that Fortis has attained its current form due to its focus on how success has been achieved to date. Fortis, with a personal lines dominated portfolio - of which around 70% is motor and 18% household, recorded a pre-tax profit in 2003 of £43.9m - an increase of 35% on the previous year.

He adds that, while Fortis intends to grow its commercial book, this is not being done to change its current commercial/personal lines split.

"Fortis intends to continue its focus on small to medium-sized enterprise business, such as shop and office packages and cover for the self-employed under our Semploy scheme," he says, adding that, while there are no new products planned at this stage, it is considering commercial motor cover in future.

Although Dobson, as part of acquainting himself with his new responsibility, is looking at its distribution chain to determine how best to grow the company, he is emphatic that growth will be a very measured affair. He says "I am currently looking at those existing distribution and agency bases that use Fortis and have been successful. I'm also looking at the customer profile to identify existing opportunities within our distribution channel. If our proposition widens, I would need to know what this brings us but would also need to know that this would not compromise service."

Concerning the insurer's stand on intermediated personal lines, Dobson admits that this is against the grain but believes its focused strategy supports customer demand for something different. He adds that the use of a cross-section of firms throughout the broking spectrum is what supplies the Fortis book with stability. He continues: "People continue to want advice and our view of the broker market for personal lines is that it has weathered and will continue to weather scaremongering. In a competitive market place there are customers who want to be able to contact a professional rather than a call centre. Good brokers know this and are building on their professionalism to ensure future success."

Similarly, the Fortis approach to small commercial business aims to provide the efficiency of other carriers but with a personal touch. "There has been a move by some towards improving efficiency at the expense of service," he adds.

As a relatively small player, Fortis is keen to make the most of the flexibility afforded by its size, but to not lose sight of services such as providing small business managers with direct access to underwriters.

Dobson continues: "The small end of commercial business is an attractive aspect of the market and the platform we have gives us confidence - it is successful for us, our intermediaries and the end-client. It is tempting with a relatively small but successful portfolio to grow this quickly but, as with personal lines, this will continue to be grown in a selective manner. Although it is tempting to grow in this way when looking at its existing strength, we won't make the mistake of ruining it by rushing for market share."

Future stability

Concerning the sustainability of its heavily personal lines dependent book in a soft market, Dobson says: "There are some signs of softening in the market at present but this wouldn't be the first time Fortis has weathered a soft market. This would not be a significant threat to us as a motor insurer because of the clarity and focus on the part of the motor market we want. We have good knowledge of our existing portfolio because we have been selective and our systems infrastructure helps identify threats. This, plus an understanding of our customer profile and constantly updated historic performance information, helps us amend this keen focus to ensure stability."

Like many insurers, Dobson says Fortis has a 'watching brief' on the development of networks. "Fortis has relationships with some networks, but the strength of a network relies on its members and it remains to be seen which members will have the balance between scale and quality.

Networks need to provide uniqueness and many need to grow in strength and reputation. A number of networks seem to be doing the same thing but how they can help members through Financial Services Authority regulation is one of the interesting differentiators."

Dobson concludes: "We have no interest in being purely transactional. We intend to maintain standards by growing the business consistently and in a measured fashion. Brokers often want us to provide additional services or products but we need to get the balance right and not grow too quickly."