The reputational roller coaster – careful with exclusions, challenges and threats and an end to roll up dominance

In a week that had a spring-like feel and a glimmer of hope with a roadmap for the UK’s post pandemic journey, the insurance news had a slightly colder, wintry feel to it when it came to reputational matters. Alex gives us the lowdown on this week’s news.

Rachel Dalton’s piece on broker M&A from the Insurance Insider took us on a roller coaster journey through the recent feast times for consolidators. Trade and PE-backed ‘roll-up’ players have experienced “stellar” growth - the daily reporting on UK broker acquisitions is testament of that. But like all roller coasters there’s always the scary fall after the climb. So, are the UK consolidator days numbered? Rachel reports on data that shows the pool of M&A targets has been shrinking over the last five years and the numbers of businesses in the consolidators sweet spot are expected to continue to fall dramatically in the next few years. The piece does raise the “what next” question? We are seeing more community focused buy and build strategies being revealed that focus on nurturing and supporting independent broker growth responding to an appetite from those businesses that are not in for a roll up.

A trio of pieces from Insurance Post’s reportage on this week’s ABI virtual annual conference flagged up some of the emerging reputational issues the industry faces. Pam Kokoszka reports on the comments of Pool Re boss Julian Enoizi, who described the pace and volume of exclusions to pandemic and human communicable diseases coverage as evidence of market failure. The exclusion theme was continued in a piece by Harry Curtis on the views of the Financial Ombudsman Service’s Caroline Wayman, who cautioned insurers not to erode policyholder confidence and widen the gap between policyholder expectations and the cover they have by adding exclusions to policies which have generated claims during the pandemic.

The plight of leaseholders affected by the cladding crisis should also be a matter of reputational interest to insurers according to Pat McFadden MP, the Shadow Economic Secretary. He called on the industry to work with government and developers to help leaseholders not just in the national interest but for the sake of its own reputational interests. A complicated and highly emotive issue that certainly needs a partnership approach to resolve. Do these usually start with cajoling and threats?

If you hadn’t guessed it already, Clare Ruel’s interview with Tony Sault head of general insurance at EY, emphasised the challenging times ahead of the UK insurance industry. Pandemic fallout, the Supreme Court judgement on BI and the FCA’s pricing review all add up to some tough years ahead. The need to restore trust and faith in the industry will be particularly challenging against the backdrop of increased regulatory focus on technology, processes, fair value measures and greater transparency in reporting Mr Sault said.

This is the same EY that recently published its forecast of overall premium income growth for UK insurers of 3.4% this year despite the continuing pandemic-driven economic impact, ultra-low interest rates and the FCA pricing review. It was the best of times, it was the worst of times… I’d settle for the normal times to be honest.