Committed to the cause

The UK insurance market could be forgiven for thinking that during the past few years Royal and Sun Alliance has put its brokered personal lines business on the back burner - after a massive cull saw its broker base reduced by 50%.

However, according to Adrian Brown, RSA's UK director of personal insurance, 2005 is the year that will see the insurer reaffirm its commitment to this market and aggressively tackle growth.

"In our intermediated business we are regaining the confidence of our broker partners and affinity relationships to demonstrate that we are serious about mutually profitable partnerships," explains Mr Brown.

Moving forward

He admits he can understand why brokers might have lost their trust in RSA after it slashed intermediaries from 4000 to under 2000, and partner brokers from 450 to fewer than 200 in 2003. However, he explains that the business at that time had combined operating ratios in motor of well over 110% and that it was no good being committed to a market that the insurer was not going to make money in. For RSA, therefore, 2003 and 2004 were spent fixing this problem and Mr Brown believes it is now in a position to move forward.

"When we were exiting a number of relationships it was quite difficult to convince those we wanted to stay in business with that we were serious - 2005 is the year for us to demonstrate, by our actions, that we are," he adds.

And Mr Brown has big plans for the year ahead: "The priority, having regained our confidence that we can make money in the intermediary market, is on growing with the partners we have turned our business around with."

Weight behind it

Firstly, RSA is aiming to get a bigger share of its partners' business.

"We want to get the share we should have," he says. "We want to punch our weight, which on a big panel means we want 10% of the panel; on a panel with three insurers, I want 33%."

The second task is to selectivity look for other partners, although Mr Brown explains RSA is not intending to go straight back into the broker relationships it came out of: "We have got strict criteria about underwriting discipline and fitting the customer bases with our own profile of where we want to be writing business. We know the areas we want to be in and it is about finding clients whose fit is perfect."

The affinity market is also going to be targeted aggressively this year.

"We'd like to be recognised as the company that anyone looking to do insurance comes to because they see us as a business that understands their brand is the most important thing they have," he explains.

"We will protect and cherish their brand for them and provide a service and proposition that differentiates them from other people in their industry."

Mr Brown reveals that he spent 2004 putting in place an operation, including pricing discipline, claims discipline and improved relationship management that will achieve these aims and win back confidence.

"We are working as one team across the business and sharing the strengths of the organisation. We are looking at how we can use this to help our partners get more business in their own books," he explains. "We realise there is more we can do for our broker partners' customer service and are turning our attention to how we can improve this. RSA recognises that with brokers you can't have a one-size-fits-all solution."

Mr Brown admits this is an area where the insurer has fallen short before and confirms that RSA is working on several pilots with brokers to test a service that gives brokers specified contact points.

The other big change is the introduction of a new dynamic pricing system that adds sophistication. According to Mr Brown, a pilot has been carried out using this system on 25% of its customers and is now being rolled out gradually across the whole book.

Pricing assessment

"We have just been going through a vigorous assessment of our pricing for motor and have looked at the way we rate. We will be launching this into the broker market in March and there may be a drop around July or August with more sophisticated rates," he adds.

Mr Brown stresses, however, that this is not about cutting price, claiming RSA's prices rise consistently in line with inflation. He says it is instead about being more sophisticated and looking for niches in the market where RSA can be more price competitive.

With these improvements he is confident that 2005 is a growth year for brokered personal lines. "We want to maintain our profitability because we have worked hard to get to a business producing sub-100% combined operating ratios. We have now come out of our fix-up mode and we are moving into a more aggressive market stance."

And he has a clear message for brokers: "We are working with those brokers we are working with because we are serious about working with them to develop our business. We are not waiting to carry out another cull. We've done that and we are now going to grow our business with our partners."