Service concerns reflected in insurers' reshuffle

As 2006 draws to a close, insurers seem to be holding off from the usual year-end target driven mad dash for business. This could be because Axa, Zurich and, it is rumoured, Royal & SunAlliance, and possibly others are distracted by the busy implementation of significant organisational changes.

Or it could be that the appetite to win business, almost regardless of price, is giving way to price correction and the re-emergence of underwriting disclipline. Such is the hope of many brokers and certainly there are indications that the appetite for sensible pricing is returning. A glance at the results news page will show further evidence supporting the need for price correction pretty much across the board.

However, a technical analysis of insurers accounts, plus the observation that combined operating ratios's are running hot, coupled with the fact personal and some fleet motor rates are hardening does not mean the cycle is on the turn yet.

At face value these observations make a good case for the market bottoming out but this does not take into account a competitive markets raging desire to run within an inch of its disintegration.

The truth is no one can really tell if the market cycle is changing until six months after it has happened. One theory about the absence of last minute sales by insurers is that in the first quarter of 2005 underwriters were holding onto the hope that they could still write in a way that was technically correct in order to make a profit.

However, this caution led to targets being missed and the action taken to correct that this year, as brokers know only to well, has meant the sale has been on all year and insurers have filled their boots and hit their targets.

In February, Tony Cornell predicted the hard market would return in 2008 and possibly the end of 2007, which still holds a lot of credibility. In the meantime, the reengineering going on among the UK's finest composites probably gives brokers greater cause for optimism. Axa chief Peter Hubbard put meeting distributor demands at the heart of his company's organisational rethink, which tends to indicate that brokers' tireless complaints about service seem to be finally filtering through.