How long before major redundancies in Insurance Industry?

[elanfan]

The credit crunch has had many victims so far with companies closing down, others downsizing, facing a lack of orders etc etc. All this has a knock on effect on the premiums being taken by the Insurance Industry - surely they cannot sustain a major downturn without job losses? Whats your view

[big_rob_sydney]

I worked for AIG till October, when I lost my job. Been unemployed since.

[308mate]

Im sorry for anyone who is without employment at the moment but:

it will make a nice change for the country to have the insurance industry by the balls, instead of the other way round.

[Animal]

308mate said:

Im sorry for anyone who is without employment at the moment but:

it will make a nice change for the country to have the insurance industry by the balls, instead of the other way round.

You think so?

The market for the class of business I write is so soft at the minute that we either forget our pricing structure completely or don't bother giving out quotes. Not much fun when your job security hinges on you hitting premium targets. Balls very much on the block, thanks.

[Jubal]

Animal said:

You think so?

The market for the class of business I write is so soft at the minute that we either forget our pricing structure completely or don't bother giving out quotes. Not much fun when your job security hinges on you hitting premium targets. Balls very much on the block, thanks.

With respect, the problem you have there isn't the customer, it's the employer's unrealistic expectations.

[308mate]

Animal said:

308mate said:

Im sorry for anyone who is without employment at the moment but:

it will make a nice change for the country to have the insurance industry by the balls, instead of the other way round.

You think so?

The market for the class of business I write is so soft at the minute that we either forget our pricing structure completely or don't bother giving out quotes. Not much fun when your job security hinges on you hitting premium targets. Balls very much on the block, thanks.

Yes, no doubt at the moment times are tough and I expect when your job hangs on it, youd hope for a bit more sympathy.

But you just try insuring a £1000, 1 1itre stbox, 3rd party only for a first time driver. Then whose balls are on the block? "Well sir, you can pay these extortionate rates that we've stitched up between oursleves, or you can just not take the car on a public road. Up to you."

[Muncher]

Chatting to my Dad who is at AXA the other night and he thinks they will have no problems at all. Their investments have taken a hit but they're for the long term, credit default insurance has taken a hit but with AIG gone that's one of their competitors gone. They're pretty isolated from the credit crunch to be honest.

[Animal]

Jubal said:

Animal said:

You think so?

The market for the class of business I write is so soft at the minute that we either forget our pricing structure completely or don't bother giving out quotes. Not much fun when your job security hinges on you hitting premium targets. Balls very much on the block, thanks.

With respect, the problem you have there isn't the customer, it's the employer's unrealistic expectations.

Actually I'd say it's both! Employers obviously want to remain as profitable as possible and maintain a good COR so set challenging targets. However, as new capacity comes into the market (and as insurers and brokers use whatever leverage they can to get business - including the promise of lower premiums) prices drop. What's happened (and I'll say now that I wasn't in the market at the last soft period) is that prices have for many Insurers become unsustainable at their current levels. Claims come in, costs go up and premiums have to increase as a result. Customers are going to have to get used to the fact that it's been cheap for a while but it won't last forever.

[silverfox999]

The insurance side i am in is suffering from a weird downturn in work. It was occuring before the phrase credit-crunch was even coined.

I think this has caused the first round of redundancies we have seen, and to answer the thread question, i think it will be in the first quarter when chunks more disappear...

[Animal]

308mate said:

Yes, no doubt at the moment times are tough and I expect when your job hangs on it, youd hope for a bit more sympathy.

But you just try insuring a £1000, 1 1itre stbox, 3rd party only for a first time driver. Then whose balls are on the block? "Well sir, you can pay these extortionate rates that we've stitched up between oursleves, or you can just not take the car on a public road. Up to you."

I don't want sympathy! I enjoy my job and whilst I'm not the best person in my team at it I do pretty well.
What you've got to understand is firstly that insurance is like any other market: if you don't like Mr A's carrots then get them from Mr B.
Secondly, price is only one factor. As an example, I used to have my car insurance with Egg and stayed with them for a few years even when I was offered cheaper cover elsewhere. I stayed with them because I'd always had excellent customer service and their claims team were very good then I needed them. As I said, price is only one factor.
Lastly, insurance rates are not just made up, they're a result of lots of very expensive (and I imagine astonishingly boring!) actuarial analysis that tells the bod with the headset that, statistically speaking, you are an average risk but that your postcode sucks or your car is statistically more likely to get stolen because it's blue or whatever.

Ever had an accident? ever wondered how much it was going to cost your insurance company? I forget the current figure, but motor insurers pay out something like £1.20 in claims costs for every £1 they earn in premium. I imagine they make money on things like instalment plans and cross-selling, etc. They certainly don't make money on the insurance!

[308mate]

Animal said:

308mate said:

Yes, no doubt at the moment times are tough and I expect when your job hangs on it, youd hope for a bit more sympathy.

But you just try insuring a £1000, 1 1itre stbox, 3rd party only for a first time driver. Then whose balls are on the block? "Well sir, you can pay these extortionate rates that we've stitched up between oursleves, or you can just not take the car on a public road. Up to you."

I don't want sympathy! I enjoy my job and whilst I'm not the best person in my team at it I do pretty well.
What you've got to understand is firstly that insurance is like any other market: if you don't like Mr A's carrots then get them from Mr B.
Secondly, price is only one factor. As an example, I used to have my car insurance with Egg and stayed with them for a few years even when I was offered cheaper cover elsewhere. I stayed with them because I'd always had excellent customer service and their claims team were very good then I needed them. As I said, price is only one factor.
Lastly, insurance rates are not just made up, they're a result of lots of very expensive (and I imagine astonishingly boring!) actuarial analysis that tells the bod with the headset that, statistically speaking, you are an average risk but that your postcode sucks or your car is statistically more likely to get stolen because it's blue or whatever.

Ever had an accident? ever wondered how much it was going to cost your insurance company? I forget the current figure, but motor insurers pay out something like £1.20 in claims costs for every £1 they earn in premium. I imagine they make money on things like instalment plans and cross-selling, etc. They certainly don't make money on the insurance!

Id swallow all that much more readily if they didnt have an uncanny habit mysteriously slashing quotes in half, in response to me simply informing them of a competitors quote. Strange.

[Animal]

Not at all. Everyone haggles!

[Jasandjules]

I know that insurance companies are supposed to pay out more than they take in, but I reckon they could slash their costs if their "excuses department" and the "we know we have to pay out but we'll delay as long as possible" departments were scrapped.

[suthol]

Animal said:

308mate said:

Yes, no doubt at the moment times are tough and I expect when your job hangs on it, youd hope for a bit more sympathy.

But you just try insuring a £1000, 1 1itre stbox, 3rd party only for a first time driver. Then whose balls are on the block? "Well sir, you can pay these extortionate rates that we've stitched up between oursleves, or you can just not take the car on a public road. Up to you."

I don't want sympathy! I enjoy my job and whilst I'm not the best person in my team at it I do pretty well.
They certainly don't make money on the insurance!

QBE the company that I worked in IT for here in Sydney had P/L ration of round 97% in 2007 when I left if I remember correctly so they certainly made money directly out of insurance business worldwide , but ultimately insurance companies live on investments.

Premium income from policies is a cash business so there is a steady stream of cash up front of all policies available to throw at the investment market.

[VXR_Driver]

In hard times, companies tend to buy more insurance, because they can't afford to take on as much risk themselves. Therefore redundancies (other than "restructuring") are less likely at the moment.

[Fats25]

Muncher said:

............ but with AIG gone that's one of their competitors gone.

Where have they gone?

I'm pretty sure they are still there, and doing ok at the moment. I don't think their insurance was the problem, it was their investments.

With regards to the OP - as has already been said, the issue for most companies is the long term investments, not the insurance they are writing. I have no doubt there is a downturn, but the specialist/good insurers will survive and probably grow.

Also remember that although most people on here think of car insurance, and the con that can appear to be, it is a tiny piece of most companies portfolio. I worked for a company that created Admiral, and sold it, as the profits were not valuable enough for the overall business model. The idea was to create the company and then sell it on from day one, just to make the money for the directors on the sale of the business.

[Animal]

VXR_Driver said:

In hard times, companies tend to buy more insurance, because they can't afford to take on as much risk themselves. Therefore redundancies (other than "restructuring") are less likely at the moment.

Actually, I'd say it's the opposite for my class of business (Professional Indemnity): all firms are looking to save money wherever they can and a number of them are looking at either cancelling their cover or taking out a lower limit of indemnity - it's all fine until they have a claim!

[VXR_Driver]

Animal said:

Actually, I'd say it's the opposite for my class of business (Professional Indemnity): all firms are looking to save money wherever they can and a number of them are looking at either cancelling their cover or taking out a lower limit of indemnity - it's all fine until they have a claim!

ah I see. Hence the softening market you mentioned previously. Do you feel secure in your role though? has your number of clients reduced? also, they can't really do PI underwriting offshore can they?