QUINN Insurance may have to increase the price of some of its UK commercial insurance premiums by as much as 3,000% to secure regulatory approval to re-enter the market.
It is understood that Quinn Insurance, now run by joint administrators from Grant Thornton, was running some lines as substantial loss-leaders to boost its market share in the UK, though it was undercutting rivals on other lines of business by a much smaller figure. Quinn's UK arm generated losses of €44m in 2009, with the commercial lines making an underwriting loss of €28m of the total.
The administrators, Michael McAteer and Paul McCann, submitted a new business plan to the Financial Regulator two weeks ago to get the commercial lines (consisting of public and employer liability) re-opened to new customers.
Sources said that the UK commercial lines needed to be "significantly repriced" to gain regulatory approval. The Financial Regulator declined to comment on when it would make a decision on whether to allow the company resume writing new premiums.
"While the proposals are being promptly considered, our deliberations on this matter will take some time as there is a considerable amount of actuarial analysis and other considerations involved," the regulator said. It will also have to consult its British counterpart, the Financial Services Authority, on the decision.
In its High Court affidavit seeking the appointment of the administrators, the regulator said that despite repeated assurances from the then Quinn management it failed to limit its premium growth in the UK. The company told officials from the regulator's office that premium income in 2009 would be curbed by hiking prices. The regulator pointed out this would do little to limit its losses there. It has agreed to allow the company take on new motor insurance customers. The administrators have yet to submit plans to re-open its professional indemnity lines.
It is believed that even if Quinn Insurance returned to the UK commercial market it would have no impact on plans to cut as much as 900 jobs at the company. The company said last week that the number of applications for a voluntary redundancy scheme had passed the number required. It will finalise the job cuts in the next couple of weeks.