Insurer Failure – no good news for anyone.
Once again the general insurance industry is faced with another insurer going bust and having to deal with the consequences around customer trust. Enterprise Insurance Company have been declared insolvent and liquidators have been appointed.
Insurer failure is the worst-case scenario for a broker and customers. At time of writing it is not clear what the implications are for those customers insured with Enterprise. Cover is in place but significant uncertainty around whether claims will actually be met. Even insurers regulated outside of the UK have to pay a levy into the Motor Insurers Board (MIB) .Third party claims will be met by the MIB but not own damage losses https://www.mib.org.uk/media-centre/news/2016/july/information-for-those-with-a-claim-against-enterprise-insurance-company-plc/
Brokers may have other issues to face beyond customer loyalty to them and trust. The Insurance Brokers Standards Council highlights a number of duties, one of which is a duty of care. In law, it may be difficult when there is a sudden failure of an insurer but it is easy to take a view that placing cover with an ailing insurer shows a lack of reasonable care and skill. Customers will decide inevitably what they think.
Insurance Brokers have a more complex combination of factors that you might think when giving customers advice about carriers. Fair market analysis will of course include the service provided by underwriters and claims staff and the scale and scope of cover but often at the back of the queue is an insurers financial security.
Insurer financial security is a complex equation. Credit ratings are crucial but are not absolute. We know this empirically to be true. Yet, looking for the warning signs is not complicated.
- · Rapid “pinch hitting” into a market against the grain of risk and reward
- · Limited route to market – large books of business with a few brokers
- · Claims delays
- · Unusually high commissions
- · Credit rating changes
- · Management involvement in capital calls
- · Understanding what being authorised outside of UK means
Brokers who look the other way and then feign surprise at a failure will suffer embarrassment at the least and a lot worse than that potentially. At Anthony Jones we have worked with insurers we trust over a long period of time. Our reputation for giving quality advice is not to be compromised and existing customers continue to provide superb feedback. We are always delighted to talk to potential new customers.
Anthony Jones Insurance Brokers