Specialist motor insurer ERS has announced record profits of £32.8 million for 2020 and an improved combined ratio of 91.9%, as the company prepares to expand its capabilities into new lines of business.
Profits increased from 2019 on the back of disciplined underwriting, the realisation of technology investments and also lower claims frequency as the COVID-19 pandemic altered driving behaviour.
As a result, ERS has generated its highest annual profit since it was acquired by Aquiline in 2013.
Despite the strong result, driven in part by the pandemic, the crisis also had a negative impact on premiums for the firm as demand in Private Car, Minibus, Taxi and Fleet products slowed in light of reduced trading in some sectors and owing to policyholders altering their coverages.
According to ERS, this reduction in demand was mostly offset by growth in demand for some of its most specialised solutions, including Agriculture, Supercar, and Courier as intermediaries looked to place business with an A+ rated carrier in light of market instability.
For 2020, ERS has recorded gross written premiums (GWP) of £329 million, compared with GWP of £360 million for the previous year.
“We are beginning to build a solid track record of results and I have every confidence we will
continue to grow through disciplined underwriting and expert judgement aligned to our strategy. The positive performance of the motor business is critical as it provides us with stability as we enter an exceptionally exciting and pivotal period, expanding our capabilities into new Commercial and Specialty lines,” said ERS Group Chief Executive Officer (CEO), Peter Bilsby.
The company’s growth into new lines of business will be interesting to watch develop as it’s been suggested that ERS’ expansion could happen quite quickly.
Turing back to its results, and both support for COVID-19 and underwriting discipline bolstered the positive performance of its motor business in the year. The insurer made some significant changes to its wordings in light of the pandemic, enabling policyholders to make voluntary deliveries throughout the pandemic, while accidental damage excesses were waived for key workers and courtesy cars were provided for free.
At the same time, the firm’s realisation of recent technical investments built on its legacy free platform. The company notes that 90% of commercial motor new business is now digital after the establishment of new eTrade features which provides brokers with the ability to self-serve the full policy lifecycle online.
Furthermore, the insurer highlights the ongoing rollout of insurer hosted pricing, which has enabled it to react in real-time to market needs.
“Whilst it would be easy to point to a reduction in claims frequency throughout 2020 as a key input to the result, the digitalisation of Commercial products has been fundamental.
“By creating a full lifecycle online broker trading platform, we have been able to cope with changes in the market and can scale better than ever before – the pandemic alone saw demand for our Commercial products increase by over 60%, all of which was traded online. Technology investments will be a key pillar of our proposition through 2021 as we look to continue to differentiate by digitalising some of our most specialist products, making it easier than ever for brokers to trade with us,” said Bilsby.