Beazley announced its first half results for 2016 last Friday, reporting a slight fall in profit due to a drop in premium rates in the large risk business the company underwrites. Gross written premiums saw a rise however, with a 2% increase recorded over the period.
Speaking to Insurance Business UK,
group finance director at Beazley Martin Bride said the results were positive overall and results were aided by a gentle claims environment. However, he noted overall environment is challenging for both brokers and insurers.
“We are both experiencing some quite significant parts of our portfolio where rates are being reduced currently because of competition, that does hurt our margin, but we can still be lucky,” said Bride.
“We do insurance against hurricanes in the US, we’re getting far less premium on that than we’re used to, but there have been far less hurricanes. So we’re still making a profit.”
While this a positive for insurers, Bride said this makes things tricky for brokers.
“If you’re an insurance broker, if the amount of premium for that class of business has gone down by a third, you’re getting one-third less revenue,” said Bride. “Doesn’t matter whether or not the hurricane occurs, you’ll still get less revenue, and that’s creating quite challenging business environments for some insurance brokers.”
Across the areas Beazley considers its short tail business, such as its reinsurance business against natural catastrophes, property insurance and terrorism insurance, the industry is currently very competitive.
Naturally this means some different areas of growth for the business to focus on. Bride said the company’s specialty lines business, which is professional indemnity insurance for healthcare and technology sectors in particular, and for architects, engineers and lawyers, is one such area.
“It’s a business which is very focussed on the US economy because it’s the largest economy in the world,” said Bride. “Within that, in the technology sector, we do sell cyber insurance which is a product that an increasing number of companies realised they need to buy, and are starting to buy, but not nearly everyone has bought it yet. That’s a good opportunity for both insurance brokers and Beazley as an insurance company providing cyber insurance to increase the penetration of that product.”
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