Searchlight - Letter of the month

Insurance practitioners that have studied for professional qualifications might be forgiven for thinking that there are such things as underwriting principles. For example, in motor insurance, the vehicle, where and how it is used, the driver and claims records are all factors as well as facts. An insurance broker might also be forgiven for expecting insurers, or an insurer, to be consistent in assessing the risk and calculating a premium. The facts are the facts, underwriting is surely underwriting - for profit.

Is underwriting finally dead? I ask this after 35 years in insurance and, as someone well aware of other reasons for setting premiums. I would also hope insurers regard the broking world I live in as adding value and being reasonably responsible, professional and certainly providing advice and guidance. One insurer illustrated recently the extent to which there is now no underwriting taking place.

My firm lost the personal motor insurance of two long-standing clients:

Client A (£1883) - Porsche Cayenne, London SW3, a 54-year-old widow; and client B (£2200 two cars) - New Jaguar XJR, Beaconsfield, a 44-year-old events organiser.

As one would expect, we insured both clients with Norwich Union. Each client was persuaded to obtain a quote from the distributor (manufacturer's scheme). They took it - well, who wouldn't? Client A (£1100 approx.) - Insurer - Norwich Union Porsche 'scheme'; and client B (£1500 approx.) - insurer - Norwich Union Jaguar 'scheme'.

How can our 11% commission come anywhere near these 41% and 32% differentials? I do not believe our clients suspect us of having taken 30% brokerage on their business over the years.

Should we be told what is going on? Who is subsidising who? Perhaps all sensible insurance brokers handling private motor insurance should admit defeat now, as "with friends like these ..."

TPW Dowlen, Director, Argent Insurance Brokers.