- June 2011 interim results demonstrate that the strategic review implemented in the second half of 2010 to focus on wealth management, healthcare and general insurance is on track to deliver strong, profitable growth
- In the first six months of 2011, UK Direct Personal Insurance revenues rose 22%, taking total UK & Ireland Property & Casualty (P&C) revenues to £2 billion (+4%)
- Net new money invested with AXA Wealth increased 18% to £1.1 billion, increasing funds under management by 5% to £18.9 billion
- The total P&C current year combined ratio improved 2.1 points to 100.0%
- 2011 Underlying earnings improved significantly to £69 million (June 2010 comparable scope: £13 million)
- AXA Wealth agreed a seven year partnership with Co-operative Bank to provide financial advice and Wealth solutions to the bank's 5 million retail banking customers across its branch network. Alongside its existing partnerships with Yorkshire and Clydesdale Banks, AXA Wealth now has exclusive distribution to 7.7 million bank customers with 500 branch based advisers
- AXA became the first - and so far only - insurer to unilaterally ban referral fees, highlighting the need for legislation to curtail market practices which fuel the 'compensation culture' and consequential increases in motor premium.
Commenting on the results, Paul Evans, AXA UK & Ireland group chief executive said ”The sustained growth and improved profitability across each of the UK & Ireland operations, against a continuing background of challenging economic conditions, demonstrates the benefits of the reorganisation completed in late 2010 and the resolute focus we now have on each of our target market segments. In particular, the new seven year bancassurance partnership with Co-operative Bank demonstrates the logic and strength of the retained 'RDR-ready' AXA Wealth business, following the sale of the non-core elements of AXA Life in 2010.
Commenting on referral fees, Evans added “The rise in motor insurance premiums has continued, albeit at a slower rate, as insurers seek to restore profitability in the face of spiralling personal injury claims. Department of Transport statistics report a 10% fall in the number of road traffic accidents involving personal injury over the past three years, yet personal injury claims on motor insurance policies have increased by 43% over the same period. There seems to be no question that UK society is drifting into a compensation culture, encouraged by an industry of claims management firms and personal injury lawyers that has formed to profit from road traffic accidents. Indeed, in some regions of the UK, the frequency of personal injury claims are more than double the level we see in the Republic of Ireland, where these practices are yet to take hold.
“AXA remains the only insurer to have banned referral fees and whilst we welcome signals that the Government is minded to impose a market-wide ban on referral fees, they are a symptom - not the cause - of the increase in personal injury claims. We believe more radical steps are needed. Firstly, a robust review of the fixed fees earned by personal injury lawyers. The fixed fees under the Ministry of Justice (MoJ) Portal are quite obviously too high at £1,200 given they allow an average referral fee of around £800 to be paid and still generate sufficient profit. The near doubling in claims management firms between 2008 and 2010 stands as testament to the level of profitability available from this work. Logic suggests that a reduced standard fixed fee in the region of £400 would still allow personal injury lawyers to earn reasonable profits.
“Measures are also required to increase the burden of proof for whiplash to drive out fraudulent claims. There needs to be a comprehensive medical evaluation of muscle damage following a typical low impact road traffic accident, as it is these incidents that are driving the increase of personal injury claims which have caused motor premiums to rise. Such an evaluation will help deepen our understanding of minor soft tissue injuries - and provide the basis for better diagnosis - so that those who are injured by the negligent acts of others receive the timely and fair compensation they are due - and spurious claims can be filtered out and rejected without incurring unnecessary cost.”