Boom or bust - is there another way? Norwich Union's letter to brokers

The boom-bust cycle of premium pricing has done nothing but harm the stability of our industry and has helped foster a widespread reputation for UK insurers as being out of control at best, and opportunist at worst.

Breaking the pattern of constantly fluctuating premiums is in everyone's best interest - brokers and your customers, as well as insurers.

Predictable insurance premiums are critical in calculating long-term business plans. Chasing artificially low premiums may win business in the short -term, but unsustainable prices will inevitably lead to over-inflated hikes in the future. And cheap deals of course mean lower commissions - we have already seen some broker job cuts resulting from pressure on price levels.

It is up to all of us in the industry to end the volatile cycle of highs and lows. Insurers need to improve the accuracy of premium planning. But we also need our broker partners to support us in the pursuit of stability.

Insurers with a long-term commitment to premium stability might not always be the cheapest on the market. But, we will be able to continue to offer financial stability and security. We will also be in a much stronger position to be able to avoid the large premium increases that have characterised the last few years. Keeping a watchful eye on the future will help us to avoid this volatility.

At Norwich Union, we are planning now for a number of new potential risks.

The booklet, An A to Z of Risk, gives a glimpse of the areas where we think we need to be focusing our attention. We hope you find it interesting reading.

The research behind it forms part of our ongoing efforts to level out the sharp undulations of the pricing cycle to the benefit of us all.

John Seaton, Director of underwriting, Norwich Union.