Back to the shop floor

Let's start with a few facts: employer's liability rates have seen an effective reduction of more than 50% in the past four years; credit hire is now adding more than 5% to motor rating; personal injury claims inflation is running at over 8%; and fraud and arson frequency increases significantly in a recession.

Rates need to harden now or we are heading for the very situation that customers vilify the insurance industry for: sudden swings in premiums with rate increases between 20% and 30%.

Although there will be differences among insurers, the general consensus is that rates need to rise between 5% and 10% in 2009.

There is capacity out there willing to achieve short-term volume by writing at expiring or reduced terms, though this will always be the case; we all know where these businesses end up and the impact such actions will have on customers.

The real issue that we need to address is that the art of selling needs to be rediscovered - again. The past few years of broking to reduce rates have gone; today's reality is the need to sell claims inflation increases to a hard-pressed customer base that is grappling with the recession. There is no pretence from me that this is easy but that is what a good sales force is all about - convincing customers that stability and reasonable rate increases now are a better way forward than crisis-driven increases of 20 or 30% later; we all saw the impact the latter had on customers and the profession's credibility in 2001.

Please, invest time in coaching and encouraging your sales and account executives to sell stability and sustainability. We'll be right there with you to help explain all the factors influencing rates, just as we did in the early part of this decade.

David Smith, managing director (broker division), Zurich UK General.