Historic catastrophe losses in 2017 have thrown serious shade on the insurance industry. For many insurers and reinsurers, the end-of-year results rolling in are as glum as the storm clouds at the centre of those catastrophic losses.
Global specialist insurer Hiscox was yet another huge name to get caught in the storms. On Monday, the insurer announced a somewhat dreary headline financial result, with profits before tax slumping by more than £300 million. Profits fell from £354.5 million in 2016, to just £30.8 million in 2017, primarily as a result of huge natural catastrophe losses.
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But, underneath those headline losses lie a bed of significant victories for Hiscox, especially via its Retail businesses: Hiscox USA, Hiscox UK and Europe, Hiscox Special Risks, and DirectAsia. The Hiscox Group increased its gross written premium from £2,402.6 million in 2016 to £2,549.3 million in 2017. Around 56% of that premium was written through Hiscox Retail, which achieved profits of more than £100 million for the second year running.
“In summary, 2017 was a good and profitable year in a historic year for catastrophes,” said Joanne Musselle, chief underwriting officer, Hiscox Retail. “Our long-term strategy of balancing out the larger volatility of our big-ticket [larger premium, catastrophe-exposed business] with our retail operation [smaller premium, less volatile business] has served us well.
“Hiscox Retail has continued to demonstrate consistent growth and profitability. We now have 840,000 customers worldwide, and we’re adding an additional 500 customers per day. We’re continuing to invest in marketing and infrastructure to support our consistent growth, and make sure we can service our customers quickly and efficiently in all areas of the insurance transaction.”
For a number of years, the insurer has been operating an “omnichannel distribution strategy,” offering consumers multiple ways to transact business, including via intermediaries, direct business, and through partners. The broker channel remains a “significant part” of Hiscox business, but the company will continue to adapt to customer preferences, Muselle told Insurance Business.
“Our omnichannel distribution strategy is really important to us. We remain very committed to all of our channels, and we’re continuing to invest in order to drive better customer service,” she said. “Recently in the US, we’ve noticed a trend that some of the new, smaller companies buying insurance for the first time are choosing to transact either on a direct basis or using a partnership through a bank or another insurer. We’ve had some fantastic growth with our partnerships in the US and we think there’s great opportunity to grow that part of the business further.
“In 2018, we want to build on the positive momentum coming through Hiscox Retail organisations. We think investment into marketing, people, data and technology, are the keys that will enable us to grow our business with the momentum that we’re already building.”