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General Accident plc

General Accident plc

United Kingdom PH2 ONH
(0738) 21202
Fax: (0738) 21843

Public Company
Incorporated: 1885 as General Accident & Employers Liability Assurance Association Ltd.
Employees: 30,000
Assets: £8.12 billion (US$13.11 billion)
Stock Exchange: London

General Accident is the holding company for General Accident Fire and Life Assurance Corporation, which is the third-largest composite insurance group in the United Kingdom. The company was founded in Perth, Scotland, in 1885 at the height of the Industrial Revolution, when Great Britain had become known as the workshop of the world.

British preeminence as an industrial power had been purchased at a high price. Unsafe factory machines and hazardous working conditions led to the death and maiming of thousands of British workers. In response to trade union pressure, the British government introduced the Employers Liability Act of 1880. This act made employers liable to workmen involved in certain on-the-job accidents.

In 1885, a group of Perth entrepreneurs saw the insurance potential of this new legislation. In return for an annual premium, the group would safeguard employers against any liability arising from employee accidents. The importance of employers liability insurance to the new company was reflected in the companys original name, General Accident & Employers Liability Assurance Association. The first board of directors of General Accident (GA) came from diverse backgrounds. Chairman George Kyd was an agricultural auctioneer and land owner. Among the directors was a farmer, a doctor, a bank manager, and a brewer.

Premium income from the first 13 months amounted to only £2,833 with claims of £335 and expenses of £1,942. Yet this modest beginning did not inhibit expansion. Beyond the Perth office, GA assigned representatives to London and to Aberdeen and Edinburgh, Scotland. In 1887, 27-year-old Francis Norie-Miller became the chief executive of the company as a result of his appointment as secretary. An insurance innovator with enormous energy, he dominated the management of GA for many years and remained highly influential until retiring as chairman in 1944.

With the appointment of Norie-Miller, 1887 became a landmark year in the companys fortunes. That year the company entered into an arrangement with Malcolms Diary & Time-Table of Glasgow to insure for £100 passengers killed in railway accidents, on the condition the victim possessed a copy of a Malcolms time-table or diary. Malcolms paid a 10 premium to GA for every 25 items sold. This GA insurance innovation was the beginning of a lucrative coupon insurance scheme.

Because of diversification into new insurance markets, the company was renamed General Accident Fire and Life Assurance Corporation in 1906. In 1896, GA produced its first prospectus for motor coverage. In 1899, Scottish General Fire Assurance Corporation was incorporated into GA, which now provided both fire and accident coverage. Norie-Miller also established a U.S. office in 1899.

In the first decade of the 20th century GA established overseas branches in Australia, Canada, South Africa, Belgium, France, and Holland. Norie-Miller instituted the home bonus in 1908, whereby five years without a claim earned the insured party a free premium in the sixth year of insurance. From its inception, the motor department made steady progress, including a notable first, the issuance of a policy for the Prince of Wales in 1908.

The steady growth of General Accident was interrupted by the outbreak of World War I in 1914. Many of GAs young employees served in the trenches, and two floors of the London head office were converted for the use of war-refugee services. These refugees included some Belgian employees of the GA office in Antwerp.

The postwar period saw an improvement in the living standards of most Britons and motor-car ownership was no longer a preserve of the rich. In 1924 Norie-Miller introduced a scheme which boosted GAs motor-insurance performance dramatically. In collaboration with Morris Motors, GA arranged that each car sold by that company would have free insurance coverage for one year; the premium to be paid by Morris. This plan had a high claims cost because premiums were not tied to individual risks, but it introduced GA to a large section of the motoring community, and many motorists retained GA, for auto and other types of insurance. The resulting business served GA well in the years which followed, especially after the introduction of the Road Traffic Act in 1930, which made third-party motor insurance compulsory for all drivers. By 1937, General Accident had already issued one million motor policies in Britain.

Following the introduction of the Road Traffic Act, the motor market became attractive not merely for its own sake but also because of the access it offered to growth in other fields of insurance. The structure of the British insurance industry was highly monopolistic. The Fire Offices Committee (FOC), representing the older insurance companies, dominated the fire insurance market. The FOC restricted entry to the market through the manipulation of rates and limits on reinsurance facilities. Denial of entry to one market curbed access to all others. Despite GAs powerful position in the motor market, the company had been excluded from tariff membership and its share of the fire market was correspondingly limited. Observing that the motor market had proven far more difficult for the tariff offices to control than other markets, GA used its motor insurance to expand into areas from which it had been excluded by the FOC.

Throughout the 1930s GA expanded in the United States as well as in Britain. Having issued its first U.S. auto insurance policy in 1911, GA enjoyed a period of prolonged prosperity in the U.S. auto market even during the Depression. The Potomac Insurance Company of Washington, D.C., GAs U.S. subsidiary, increased the firms involvement in fire insurance. Meanwhile, Francis Node-Miller, the architect of this U.S. expansion, became chairman of the board of GA in 1933.

With the outbreak of World War II, in 1939, General Accident again curtailed its insurance activities while many of the companys employees served their respective countries. GAs head office in Great Britain lost contact with many of its overseas branches as a result of the German occupation of Europe and the war with Japan in the Pacific. In 1944 Norie-Miller relinquished the chairmanship of GA. Norie-Millers son, Stanley Norie-Miller, served as chairman from 1951 until 1968.

GA continued to grow during the postwar period, acquiring several new subsidiaries. In the United States GA formed Pennsylvania General Fire Insurance Association in 1963. In Britain GA took over The Yorkshire Insurance Company in 1967. Yorkshire shareholders chose to sell a majority holding to GA despite a higher bid by Phoenix Assurance because of GAs strong standing among insurance investors.

A prolonged period of steady growth enabled GAs assets to reach £1 billion in 1975. By the early 1980s assets were over £3 billion and total premium income was more than £1.5 billion. U.S. operations continued to generate one-third of premium income.

During the 1980s, deregulation of the financial-services industry led to a blurring of the historically rigid boundaries between insurance brokers and insurance companies in the complex British insurance market. These measures and the proposed integration of the European Economic Community in 1992 created an opportunity for enormous growth, but competition among insurers intensified.

In response to this competition, General Accident decided, in 1986, to modify its corporate identity. GA launched an advertising campaign which presented a new image, attempting to combine both professionalism and humanity.

GA also committed itself to an increasingly acquisitive strategy. By the end of the 1980s, GA had acquired over 500 estate agencies. With this policy GA enlarged its housing insurance business and created new channels for the distribution of other insurance products, especially lucrative life policies. The move into the estate-agency business was not initially successful: the depressed British mortgage market during the late 1980s and into 1990 subjected GA to considerable losses.

GA also assumed a heavy financial burden when it bought out NZI Corporation, a New Zealand-based insurance and banking firm, in July 1988. NZI was to be the platform from which GA launched an expansion into the Pacific market, especially the relatively untapped markets of Korea and Taiwan. But the poor state of NZIs banking arm resulted in substantial and embarrassing losses for GA. In the first six months of 1989 alone, NZI lost £29.3 million. During the late 1980s, the once-profitable U.S. insurance market also developed problems. Large awards against drivers as well as punitive regulation of premium rates by many state governments let to severe losses in the motor market. GAs pretax losses in Massachusetts grew from $4.5 million in 1984 to $13 million in 1986. In 1988 these losses prompted GA to withdraw entirely from Massachusetts.

Worldwide, weather conditions caused massive losses through damage claims in the late 1980s. The October 1987 hurricane that swept southern Britian and the North American Hurricanes Gilbert and Hugo in 1988 and 1989 were followed, in early 1990, by a severe storm in Great Britain. The storm cost GA an estimated £48 million in claims. Life assurance premiums have also risen due to the scare caused by acquired immune deficiency syndrome (AIDS).

In July 1990 General Accident pic was formed to acquire the assets of General Accident Fire and Life Assurance Corporation. The holding company remains in a position of strength. Nelson Robertson, appointed chief general manager in January 1990, has predicted average growth will continue for the remainder of the decade.

Principal Subsidiaries

General Accident Fire and Life Assurance Corporation pic; General Accident Life Assurance Ltd.; General Accident Reinsurance Co. Ltd.; The Guarantee Society Ltd.; The Road Transport & General Insurance Co. Ltd.; Scottish Boiler & General Insurance Co. Ltd.; Scottish General Insurance Co. Ltd.; Scottish Insurance Corporation Ltd.; The Yorkshire Insurance Co. Ltd; The New Zealand Insurance PLC; General Accident Financial Services Ltd.; Grampian Properties Ltd.; Multiple Credit Services Ltd.; General Accident Insurance Company of America (U.S.A., 99.9%); NZI Insurance Australia Ltd.; La Brabanconne SA Beige dAssurances (Belgium, 92.2%); Yorkshire-Corcovado Companhia de Seguros (Brazil, 86.4%); The General Accident Assurance Company of Canada (99.9%); Pilot Insurance Company (Canada); The Hong Kong Reinsurance Company Ltd.; General Accident Insurance Company Kenya Ltd. (57%); NZI Corporation Ltd. (New Zealand); General Accident Insurance Company; Puerto Rico Ltd. (80%); General Accident Insurance Company South Africa Ltd. (51%); General Accident Insurance Company (Zimbabwe) Ltd. (91.4%)

Further Reading

Romance of a Business: Forty Years Work 18851924, Perth, General Accident, 1924; Gray, Irvine, A Business Epic 18351935: General Accident, Fire & Life Assurance Co. Ltd, Perth, General Accident, 1935; Knight, Alice W., The Yorkshire Story, York, [n.p.], 1975; The First Hundred Years, Perth, General Accident, 1985.

Michael Doorley

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