NFU Mutual bosses make hay while the sun shines

NFU MUTUAL is a rare breed among insurance providers. It is much loved by customers, most of whom live in the countryside and like the insurer’s support of the ‘rural community’.

Many of its policyholders are also kept sweet by their share of a ‘mutual bonus’ that is declared every year and which in effect provides them with a discount off their premiums.

Yet there is nothing ‘rural’ about the remuneration that the bosses of this Stratford-upon-Avon-based insurer are collecting for keeping it on the straight and narrow. It wouldn’t look out of place in the City of London.

According to the insurer’s accounts, which have just been sent to customers ahead of its annual meeting late next month, the directors enjoyed a bumper 2013 with increases to their remuneration – a mix of pay, benefits, bonuses and pensions – ranging from 21 per cent to as much as 69 per cent.

Indeed the only reason why Ian Leech, sales and agency director, received a mere 21 per cent increase was because he retired two thirds of the way through the calendar year.

Lindsay Sinclair, chief executive, reaped the most rewarding financial harvest with an annual package worth £1,722,011, boosted by more than £1million from a mix of short-term and long-term performance bonuses. All in all, his remuneration increased by 63 per cent.

Amazingly, Nick Turner, Leech’s replacement, received performance bonuses of £144,000 for just six months in the post. Nice work, if you can get it.

In the directors’ defence, NFU

Mutual enjoyed a good 2013 with profits nearly doubling to £635million.

However, as the same directors acknowledge in the accounts, this was more a result of benign weather in that year (leading to no flood in insurance claims) than management acumen. Sales of life and pension plans actually fell.

What rankles most of all, though, is that the directors reaped these rich personal rewards while the mutual bonus pot for customers shrank – it was £68million last year, compared to £76million in 2012 – and premiums continued to increase.

One NFU Mutual customer, who had just been informed that his home insurance premiums were increasing by 9 per cent, told me last week that it cannot be right that bonuses to customers are down while those earned by the directors soar into the stratosphere.

‘Words “gravy” and “train” come to mind,’ he said. It’s difficult to disagree with him.

Policyholders have the right to vote against the directors’ largesse at the annual meeting on June 26, to be held at the Heritage Motor Centre’s museum in Gaydon, Warwickshire.

With exhibits including a collection of vintage Aston Martin sports cars – and both Aston Martin and Land Rover factories not far away – the board will have the means of a quick getaway if too many questions are posed on sky high directors’ pay. WHILE on the subject of insurance, it is heartening to be told that life insurers are now routinely meeting more than 90 per cent of all claims on protection insurance policies (the Association of British Insurers will be releasing figures to this effect on Tuesday).

The result is that more than £8million a day is being paid to those who are claiming on a life, critical illness or income protection plan because of the loss of a loved one or serious illness.

Sometimes, it is good to be reminded that insurance can prove an invaluable help at a time of great need.