Brokers ponder Regent’s loss-making book
Regent Insurance Company recently indicated that it had decided to cancel its personal and commercial lines policies, written and serviced through its broker division, as these were loss-making book and offloading it would make good business sense. The bo
The Regent Group, which is part of Imperial, was at pains to point out it is not making an exit from the broker market – it believes, however, that its decision will allow the company to consolidate its business and focus on future growth. It has every intention of continuing to underwrite its motor and property classes.
FAnews readers may recall some restructuring back in 2008, when Regent Life and Regent Insurance merged. The Regent Group’s strategic move brought short-term and life business under one roof, saving approximately R35m a year – or at least that was the aim. Regent Insurance has been in business for almost 25 years and has strong ties in the motor industry as it primarily underwrites motor insurance.
BSG wants to ‘pick up the pieces’
There is now a scramble for the offloaded policies. According to reports, Broker Support Group (BSG) has declared it has a desire to ‘pick up the pieces’ – it has offered to take over the personal and commercial lines policies at the same premium, provided brokers provide it with the current policy schedule and claims history – but it is not the only player interested in doing so.
“The insurer market has been approaching brokers to take over the business thrown out by Regent; but you can be sure they will have a selective look at what business they take on versus business they apply punitive terms to,” said Peter Atkinson, national technical portfolio manager at the Financial Intermediaries Association (FIA). “Brokers should not simply take up the BSG offer, but must rather consider a range of alternatives before deciding on the best fit for their clients’ needs.”
Insurer weighs in
Auto & General has sent a letter to its brokers stating that in its 28-year history it has not cancelled a book of business, nor stopped doing business in a particular asset class. It has confirmed its commitment to its broker partners. “We pride ourselves on our ability and expertise when it comes to underwriting and risk rating,” wrote Sean Jackson, head of Auto & General Brokers.
The letter goes on to say that Auto & General successfully underwrites motor-only policies and launched the first commercial lines motor-only policy allowing for all risk cover, without supporting non-motor cover.
The market shake-out will doubtless see other insurers stepping in to reassure brokers and clients alike.
Are customers being treated fairly?
Would Regent’s move likely be considered fair in terms of Treating Customers Fairly (TCF)? According to Atkinson, it would.
“There is nothing in TCF that would stop an insurer from closing what turns out to be a loss-making book,” he said. “It may well be argued that the 30-days’ notice period is a little bit short to allow brokers to do the necessary to ensure alternative cover for their clients. But most likely this is the notice period in terms of the policy contract. There’s nothing like a bit of pressure to keep brokers on their toes.” Cancellations will take effect from 30 June 2013.
Atkinson said the FIA understands that the developments at Regent are part and parcel of a healthy insurance market.
We expect that our member brokers will react in the proper way to ensure that their clients’ best interests are served,” he said. “Brokers should check their clients’ needs to see if they have not changed, and find appropriate cover on the best possible terms with another insurer.”
Editor’s thoughts:
Brokers obviously have an obligation to the clients they have placed on cover with Regent. According to Atkinson, this is an example of why broker-assisted insurance clients are better off than their ‘direct’ peers. “In this case, the broker is responsible for finding a new insurer to cover his or her client’s risk – if the client was dealing directly with an insurer they would have to replace the cover without any assistance,” he said. What do you think is in the client’s best interest at this point? Comment below or email [email protected].
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