Specialist insurer Hiscox Ltd.'s U.K. division is "through the worst" of the problems it encountered in shifting to a new IT system, the unit's CEO told S&P Global Market Intelligence.
Hiscox said in its first-quarter trading statement that the U.K. division's growth was "subdued" as it continued to adapt the new system, which it is rolling out for broker-distributed business. Having transferred its commercial business over the past year, the company will shift its high-net-worth business to the new system in the second half of 2019.
Hiscox U.K. is also rolling out a new operating model for its broker-distributed business and said in its trading statement that U.K. growth would continue to be subdued "until these changes take full effect." Hiscox's first-quarter U.K. gross written premium rose 3.2% to £137.3 million from £133 million in the same quarter of 2018.
Hiscox U.K. CEO Bob Thaker said in an interview at the British Insurance Brokers' Association conference that the company had "rightly apologized" to brokers for the disruption "because it wasn't the service level that we want to offer them." He added: "We are through the worst, but we are not through it all."
Thaker replaced Steve Langan as CEO of Hiscox U.K. during the first quarter, and said his "No. 1 priority" is adapting to the new IT system and operating model "to ensure the service that we are proud of and promise brokers is back to where it should be" and improves beyond that.
Although growth overall was subdued for Hiscox U.K. in the first quarter, it said its direct-to-consumer business continued to deliver "strong growth," alongside "increased competition" in its direct commercial business. In 2018 the direct business reached the £100 million premium mark, although the bulk of the unit's premium still comes through brokers.
Insurers with growing direct businesses often face concerns from brokers that they are being cut out of the loop, and Thaker said the subject came up "in a couple of conversations" at the BIBA conference. But, while noting that the direct business "is a critical part of our business and our strategy," Thaker also said "it is in no way intended to usurp the broker market," which he described as "very much a critical part of our business and in many ways the lifeblood of our business."
Instead, he said, Hiscox's intention is to allow policyholders to buy insurance in the way that is best for them.
Another area of growth for Hiscox U.K. is cyberinsurance, a product that the market in general has been struggling to encourage smaller businesses in particular to buy. Thaker said, though, that there are signs the message is beginning to get through, with Hiscox's direct cyber product "well into the double digits" of annual percentage growth.
"What that tells you is the everyday customer understands that this is a clear risk in this day and age and is looking for protection and a robust solution. That understanding is making traction," he said.