Interim results 2015

I am very pleased with the continued progress across our business in the first half of 2015, with strong revenue growth delivered across all our markets alongside sustained improvements in profitability. The successful completion of the acquisition of Simplyhealth’s private medical insurance business was announced on 3 August 2015, providing a further substantial foundation for profitable growth.

It is clear that market conditions remain challenging both here in the UK and in Ireland. Whilst premium rates are beginning to increase in motor to reflect the increased car usage and therefore claims frequency that follows an economic recovery, premium rate increases in other products such as home and commercial insurance are held back by increased competition, cheaper reinsurance and the relatively benign weather claims seen over recent years. Nevertheless, the insurance industry, and its honest customers, continue to bear the unacceptable cost of those encouraged by claims management companies to ‘have a go’. Past Government reforms have had some impact on motor whiplash claims, and we have been pleased to pass those savings back to customers through premium reductions, but whiplash claims are once again on the rise, while texts and cold-calling from claims management companies remain an annoying feature of our daily lives, and it is clear that more must be done to eradicate fraudulent injury claims.

In this regard, we particularly support the announcement of a review into the regulatory framework for claims management companies alongside the proposal to cap the fees they can charge claimants. We also welcome the recent referral from the Ministry of Justice to the Civil Justice Council to examine how fixed legal costs for noise induced hearing loss cases can be introduced. The ABI’s recent report on the compensation culture highlighted that for every £1 in compensation paid to a claimant, the claimant’s lawyer receives £3 in legal fees. With over 70% of such claims rejected, it is clear that the financial incentives on claimant lawyers to file high volumes of speculative claims must be constrained, allowing insurers to devote their time and resources to those who really need our help.

Despite the crucial role that Insurers play in helping rebuild lives and businesses when the unexpected happens, it is clear that insurers still have some way to go to build real trust in our industry and therefore eradicate any sense that a fraudulent claim is ‘fair game’. AXA UK is committed to reforming business practices to improve transparency and build customer trust and loyalty. Whilst more must be done, we have already implemented a number of initiatives including publication of the percentage of claims that are declined each year, simple illustrations to help customers understand the circumstances in which their claim might be challenged, and disclosure of a customer’s previous premium on all direct motor, home and business insurance renewals so that price changes are transparent. We are presently rolling out the facility for customers to provide online feedback of their experience in dealing with AXA so that new customers can see what other customers think before they buy.

The UK general insurance business units within AXA Insurance have benefitted from strong individual leadership to overcome the strategic and operational challenges evident at the beginning of the decade. With these businesses now delivering strong revenue growth and profitability, their claims teams were integrated at the end of 2014, and it is now felt that a fully integrated general insurance operation will provide the strongest platform to support our growth plans. Integration planning for the new UK general insurance organisation, which will retain a customer and channel focus, will be completed during the second half of 2015, and the new business, AXA Insurance, will become operational on 1 January 2016. The combined business will be led by Amanda Blanc who will confirm the executive leadership team for AXA Insurance by the middle of August.