|
2008 Gross premium £m |
Current maximum line size £m |
2008 Average line size £m |
|
|
Employers’ liability |
23 | 27 | 9.9 |
|
Public/products liability |
11 | 12 | 3.8 |
|
Professional indemnity |
20 | 7 | 1.3 |
|
UK commercial package |
10 | 27 | 0.4 |
|
Financial institutions fidelity and liability |
4 | 6 | 1.2 |
Notes:
The Group writes three classes of mainly UK liability. The vast majority of the business emanates from the UK with the balance mainly from Ireland and Canada.
Employers’ liability insurance protects employers against accident or injury to employees. This is written on a losses occurring basis (covering events that occurred in the policy period even if they are not notified until after expiry) for limits up to £27 million per employer.
Public liability insurance provides coverage, often written in conjunction with employers’ liability, for accident or injury occurring to clients, customers or another third party as a result of contact with the insured’s personnel, property or products. This is written on a losses occurring basis currently for limits up to £12 million per assured.
Professional indemnity covers liability which may arise from services provided by the assured, for example as a result of negligence or error which may lead to financial or physical loss. This includes, but is not limited to, services from architects, engineers, surveyors, advertising firms, medical professionals and financial advisors and is written on a claims made basis (covering losses notified in the policy period).
Amlin UK package policies combine one or more of the liability coverages mainly employers’ and public liability with motor and/or property damage protection. Stand alone property protection is also within this class, mainly on a 100% basis for small commercial and household properties.
The Group also writes a small account of financial institutions policies covering fidelity, professional indemnity and directors’ and officers’ liability for companies providing financial services. The current maximum line is £6 million. Approximately half of the income is from Western Europe financial institutions with the balance spread broadly by territory. Coverage is given on a claims made basis.
The expected claims costs from these lines of business may be impacted by larger than anticipated damage awards to injured parties as well as due to an unforeseen increase in generic claims such as industrial disease or other health hazards. It is expected that claims frequency will increase during an economic downturn as unemployment leads to an increase in action against employers and people are more likely to seek redress for third party advice or behaviour which may have led to financial loss or injury. It is also possible that many claims could arise under many policies from a common cause such as financial advice or generic building defect. The financial institutions account could be affected by a major fraud or a series of related liability claims arising from banking, investment activity, stockbroking or other practices. The property portfolio could sustain a large loss from the effects of a UK windstorm or flood event.
The Group’s motor insurance risk is predominantly UK business covering fire, theft, collision and third party property and bodily injury liability. 2008 gross premium was £59 million. Under the requirements of UK law third party liability coverage is unlimited, but matching reinsurance is purchased. The account is biased towards commercial clients such as coach operators, haulage companies, commercial vehicle fleets and company executive fleets. The Syndicate leads two facilities for fleets involved in the transportation of hazardous waste. There is also a UK agriculture and a specialist private car account written.
Claims frequency has improved in recent years due to car and road safety measures but can fluctuate due to factors such as weather conditions. UK inflation is a key factor in determining the size of motor claims. Car values affect the size of theft claims and for physical damage claims size is linked to repair costs. Inflationary pressure on court awards within the UK and Irish legal systems impacts liability claim values. Government intervention such as liability award limit changes or expense recoveries for government bodies, including the National Health Service, will also impact claim size. For the motor account, severe bodily injury and catastrophe damage claims (e.g. UK flood) are limited through the purchase of a reinsurance programme, the highest layer of which is unlimited.
Motor insurance is a highly competitive area of insurance and pricing levels fluctuate. Whilst underwriters accept business subject to sufficient rates per vehicle, in a year where there is an unexpectedly high level of claims the total premium may not be sufficient to cover all the claims. There is also a risk that legal changes impact bodily injury payments and result in a requirement to increase reserves for outstanding claims.