Canadian Underwriter

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  • Lombard and London Guarantee tie the knot

    Richard Patina, president of Lombard Commercial Lines and Robert Taylor, president of London Guarantee have announced the formation of a strategic alliance between the two insurance companies to refer business that falls within their respective areas of specialty. Lombard will refer to London Guarantee accounts seeking coverage for certain types of directors’ and officers’ liability, errors and omissions, fidelity or contract, developer or commercial surety exposures, and London Guarantee will refer to Lombard accounts seeking general commercial automobile, property or liability coverage that London Guarantee does not wish to underwrite.

    According to Patina, the alliance offers both companies a greater complement of products and services while expanding their broker reach. “We made the arrangement to offer a fuller range of products for our brokers. We decided on London Guarantee because our brokers were almost unanimous in their support,” he says. Noting the transaction will offer a greater reach in the marketplace for both companies, Patina adds he expects to see more strategic partnerships in the future between specialty insurers.

  • Call centres notch premiums

    Call centres notch premiums

    BELTON

    Premiums generated by call centres in Canada have risen by 96% since 1994, says Ted Belton who addressed the Strategy Institute Call Centre Conference recently. Belton notes the more traditional distribution methods generated premiums at a lower 20% growth rate for the same period.

    Belton, author of quarterly The Belton Report, predicts companies and brokers who fail to take heed to this implication will lose a significant portion of their customers. “In order to survive, traditional industry players have to come as close as possible to duplicating call centre convenience, accessibility and speed,” he adds. He cautions that the banks are ahead of the insurance industry in recognizing the importance of relationship marketing, noting, “traditional property and casualty insurers are still very much product oriented and ill-equipped to develop strong client relationships because brokers are a barrier between the insurer and client”.

    Belton says the rise of the call centre will continue, “in the province of Ontario alone, where there are more than 4,000 call centres, the call centre industry grew by 28% in 1997”.

  • Belton third-quarter predictions

    During the third quarter of 1998, preliminary net earning returns of Canadian property and casualty companies were down $59 million in comparison to the same quarter in 1997, says the latest issue of The Belton Report.

    The combined impact of the claims and expense numbers in third quarter 1998 was a $188 million loss, compared to a $129 million loss in third quarter 1997. Still, Ted Belton, the reports author, warns to be weary of third quarter results as they are based on the returns of insurers representing 43.8% of the total assets of insurers.

    Still, despite a relatively small sample, the current statistics are consistent with forecasted trends — claims incurred are on the rise and investment income is on the decline. Claims growth in third quarter 1998 was at 1.7% versus 1997’s -3.7%. Investment income declined $245 million from 1997’s $887 million to 1998’s $642 million.

    The preliminary figures show a declining trend in net earnings, consistent with the second quarter results. During the second quarter of 1998, Canadian company net earnings were down $143 from the second quarter period of 1997. Belton notes that bottom line figures are unlikely to improve in the coming year, with insurer expense ratios likely remaining high due to Y2K compliance costs.

    In his commentary, Belton reports that “assurebanking” — insurers entering the banking sector — is a growing trend throughout North America. Already, insurer State Farm Mutual has received a charter to become a federal savings bank in the U.S. In Canada, insurers appear to be positioning themselves for similar action, says Belton in pointing to ING’s recent strategic alliance with Equisure.