RBS accused of business insurance market share grasp

In the wake of accusations that it has been overly grasping in the business insurance market, the Royal Bank of Scotland recently stated its goals have been merely to provide increased support.

The commercial insurance arm of the bank is one of the largest players in the current marketplace.  Competitors have recently leveled accusations of market undercutting activity on the part of RBS in an attempt to maximise returns prior to a stock market flotation or a sale.

NIG, the bank’s insurance arm, has recently written to brokers with an offer to undercut their competitors’ premiums by as much as 5 per cent.  Additionally NIG has offered a 3 per cent commission increase as well.

The new deal, entitled “Guaranteed to Beat,” is set to run throughout March and into April.  Competitors targeted by RBS’ insurance arm include such firms as RSA, Aviva, and Ageas.  Additional incentives offered to brokers include apple iPads and M&S vouchers.  Rivals have called the move from the nationalised company ‘over-the-cliff madness.’

European regulators have ordered RBS to float or sell a string of assets due to the massive multi-billion pound bailout it received from the taxpayer during the worst of the global banking crisis. One RBS spokesman remarked on the new offer, stating that the firm made no apologies for wishing to offer a profitable product to such a niche market.

Many insurers have remarked that due to the complexities of the commercial insurance market RBS could be lumbering itself with liabilities that may be under-priced in the long term.

Profits from the bank’s insurance arm tumbled heavily in 2010 due to an increased number of injury claims filed against motor insurance policies.  RBS rivals have stated that underpricing long-term insurance could easily have toxic results on the market somewhere down the line.

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