Insurers’ group rocked by exit of Legal & General
Thursday 14 August 2014
The future of the Association of British Insurers has been called into question after one of its largest members quit yesterday to go it alone.
Legal & General said the interests of its shareholders and policyholders would be best served by cancelling its membership.
This comes just weeks after it called for the trade body to be “a more forward-looking organisation”.
Nigel Wilson, its chief executive, said: “Our public policy work increasingly involves sharing commercial aspects of our business with government, which, for very obvious reasons, not least competition law, we cannot share with competitors.
“We believe that, increasingly, engagement with government, regulators, quangos and other external bodies will be on a case-by-case basis going forward.”
The news is a blow to the ABI and its director-general Otto Thoresen, at a time when the insurance industry faces huge regulatory and structural changes.
These include reforms in March’s Budget that overhauled the annuity market.
The ABI merged its investment affairs division with the Investment Management Association earlier this year.
Mr Wilson added: “The ABI often concentrates, for understandable reasons, on the general insurance sector, where we have only limited business lines.”
Admiral and Allianz said they had no plans to quit the ABI and Axa UK’s chief executive Paul Evans also expressed his support. It remains to be seen what others such as Aviva and Prudential decide to do.
Mr Thoresen said: “Of course we are disappointed by the resignation of a member. However, the ABI’s continuing strong membership represents over 90 per cent of the insurance sector. The board of the ABI believes the industry is at its most effective when working together.”
Admiral’s view: Keeping a watch on premiums
Premiums stopped falling during the first half of the year but drivers should not expect insurance costs to soar soon, the chief executive of Admiral said yesterday.
Henry Engelhardt said that prices had tumbled over the past two years due to intense competition, which had an impact on growth as pre-tax profits rose just 1 per cent to £183m in the six months ending on 30 June.
He added: “In the UK there are some signs that premiums are no longer falling, but we have yet to see firm evidence of an inflection point and a return to premium growth.”
Admiral insures more than 3 million drivers in the UK and also owns the price comparison website Confused.com, which saw its revenues remain flat at £44.4m. Its international businesses in Spain, Italy, France and the United States posted a £15.5m loss, although turnover was up 9 per cent to £104m.
Admiral said its finance director, Kevin Chidwick, will be moving across the Atlantic to expand its US business; he will be replaced by his deputy, Geraint Jones.
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