Picture a small boat being tossed around by 40 foot waves and you get a good idea of what it is like to be a small insurance company in the UK motor insurance marketplace. The logistics of running an insurance company are huge, even for the great and the good. So think about what it must be like for small insurance companies. You're still confronted by all the same relationship responsibilities. The insurers, the reinsurers, the brokers, the software houses, the thousands of policy holders, the underwriting staff, the FSA and of the course the bank manager.
You still have to maintain inhouse underwriting systems, not too mention external feeds to back office systems such as CUE and MID for protecting policy holders and the market, integrated EDI to and from Brokers and a claims and underwriting department, along with agency support systems. You still need to consider new product development, rate reviews, testing of rates on the numerous software house systems, competitive analysis, stats analysis and business intelligence reporting. You still need to consider whether moving your investments offshore to Gibraltar is the best plan and how to shape the group structure to achieve the most effective posture. If you head for Gibraltar you've then got to consider reporting to the equivalent of the FSA - the FSC. Then you need to work out how you get your managers on a plane to report to the FSC every few months. Then when they're away, who is going to do the work and what about company security, recruitment, corporate social responsibility, FSA staff training, P&L accounts and the list goes on and on and on.
When your premium hits £3-£4 million per month with a net loss ratio across the portfolio looking like 90% for year to date - we ask - how the hell do you guys sleep at night?
When your risk register is about to catch fire - we ask:
Could it be that Small UK Insurance Underwriters are taking on to much?