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General Insurance Newsletter Friday 10th July 2020

10 Jul 2020

Jensten is to continue M&A pursuit - The growth strategy and ambition to control £500m in GWP has not been dampened by coronavirus or the imminent exit of CEO Bob Darling. That is according to its wholesale MD, Simon Taylor, who commented following the announcement that Darling is set to be replaced by Alistair Hardie of Cega in the coming months. “Our strategic aims are the same,” he noted. “We still have the backing of Livingbridge and facilities in place to make sure we can continue with our [growth and M&A] strategy.”

Willis Towers Watson has called its shareholders to two meetings on 26 August this year to discuss its acquisition by Aon. A filing by Aon showed that the meetings were set to take place. In addition, it revealed that the US Department of Justice has requested more information on the deal under antitrust rules.

John Quinlan, Aviva Ireland GI Chief Executive, has launched legal proceedings against the Provider, The Irish Times has reported. According to the article, Quinlan has been on leave for around eight months and Aviva has reportedly lined up Declan O’Rourke, General Manager of AIG’s Irish business, as a replacement. Nick Amin, who has been with Aviva since 2013, is currently listed as interim CEO of Aviva Insurance Ireland.

Zurich has committed to paying a real Living Wage to employees and on-site third-party contractors. The idea behind the movement is to ensure that a hard day’s work equates to a fair day’s pay. The Living Wage is currently set at £9.30 in the UK, with the higher rate of £10.75 in London. Now Zurich UK will ensure its employees meet this marker.

A female lawyer who was fired after she claimed to have been targeted by ‘sexist’ colleagues has won her discrimination case in the UK. Helena Biggs, 45, who worked for insurance firm A. Bilbrough and Co., accused her male bosses of unfair dismissal, sexism and pay discrimination before a tribunal in East London.

The popularity of the PPL platform among Brokers and Underwriters continues to surge. In the latest batch of statistics, it has been revealed that 8,031 risks were bound in the week commencing June 29. That’s up 43% from the last quarter. In addition, there were just under 20,000 user log-ins on the platform during the same period.

PIB Group, which recently made headlines with its announcement that it will be implementing a major rebrand across 12 of its businesses, has revealed its full-year results for the year ended December 31, 2019. The key highlights include revenue of £123.3 million, which is an increase of 15% in comparison to 2018, a gross written premium of £986 million and organic revenue growth of 8%. PIB’s divisions continued to evolve during the year, especially within its speciality sector, which accounts for 49.4% of the group’s revenues. It saw the addition of Steve Redgwell as CEO in January 2020 and will operate as PIB Insurance Brokers from October 2020. Its MGA division, meanwhile, is now known as ‘Q Underwriting’ following a move to unite PIB’s specialist MGA businesses under a new parent brand. This MGA division accounts for 14% of the group’s revenue.

In further news... The Cobra Network has unveiled a refreshed proposition and visual identity.  Since being acquired by PIB Group (‘PIB’), the 17-year-old independent brokers network has been using the Group’s leverage to members’ advantage. Some of the changes include leadership under Andy Tedstone who has brought in new Insurers, benefits, deals and a fresh way of working. The changes reflect PIB’s commitment to invest in the Cobra Network proposition to help grow its membership and support it through more products, technology and people. As a result, membership has been growing since the start of the year.

For an organisation to become an accredited member of the Commonwealth, it must meet five criteria including representing the true diversity of all 54 Commonwealth countries and having demonstrated that it is accountable and transparent. Sian Fisher, CEO of the Chartered Insurance Institute (CII), has revealed that the CII is now an accredited member of the Commonwealth, joining the category of Professional and Civil Society Organisations.

Specialist Insurer Beazley has announced the launch of an online booking system that will allow Brokers to arrange virtual appointments and secure relevant documentation from Underwriters. Beazley Booking, built in collaboration with Microsoft and IT consultant Redspire, enables Brokers to view Underwriter availability, book a meeting time, upload an agenda and documents, and view all of their scheduled meetings with Beazley Underwriters. The application aims to ensure that Brokers retain consistent access to their underwriting contacts during social distancing, and as the insurance industry adopts more flexible work practices in the long term. It also gives Underwriters access to a detailed log of Broker inquiries and appointments.

Zurich Insurance recently warning of a potential double disaster for the UK with flood risk adding to the woes already being endured courtesy of the coronavirus pandemic. Now, Flood Re has added its voice to the calls for the government to seriously examine the flood resilience issue as part of today’s summer statement. It points out that it has processed more claims and paid out more this year than in the first three years of its operation combined. Over 2019/20 it incurred claims at a gross cost of £160 million – that’s 10 times higher than the previous year.

A new delegated authority committee (DAC) has been formed by the Lloyd’s Market Association (LMA) as it looks to establish a customer-centric vision and a future business model. According to the association, DA business currently makes up around 40% of the market’s annual gross written premium but has lacked a strategic market committee that could provide it with focus. Now it is looking to put this right with the committee to emphasise engaging with customers, clients and the market; influence increased regulatory attention; and establish ongoing initiatives and tackle distribution challenges and acquisition costs.

Specialty analytics Insurtech Concirrus has received a massive boost in the form of a US$6 million investment. The funding comes from CommerzVentures, which specialises in helping Fintechs and Insurtechs grow.

Pikl, which was originally set up to provide insurance for AirBnB hosts, has launched an MGA in partnership with First Underwriting, Accredited Insurance, and the Claims Consortium Group. The partnership has been set up to provide Pikl with flexible underwriting capacity for a range of property and vehicle products. Pikl said the structure would enable it to bring products to market in weeks. The “A” rated capacity will be provided by Accredited Insurance (Europe), which has operations based in London, Malta and the US. It is a subsidiary of Randall & Quilter Holdings (R&Q). This capacity will be accessed through Accredited’s relationship with First Underwriting.

Canopius has launched of a set of Cyber Property products for medium to large corporations across all sectors.  The Cyber Property Damage Product Range replaces Cyber cover excluded from Property policies following regulatory action to address the issue of ‘silent cyber’, it also protects clients against risks associated with the continued reliance on technology, expanding 5G coverage and an increase in automation, connected buildings and the use of the internet of things.

Pen Underwriting has outlined a new growth strategy which involves a £1bn gross written premium (GWP) target. The move comes as the Gallagher-owned Managing General Agent marks its first five years trading as a cohesive business, after the Broker brought together its UK MGAs under the Pen brand in 2014.

Legal Expenses Provider Arag has posted a 14.7% rise in turnover to £14.1m for the full year 2019 (2018: £12.3m). In addition, the business stated that its gross written premium under management has increased by more than 6% in 2019 to £40.1m (2018: £37.8m). However, in a filing on Companies House, the UK business also revealed a slight drop in profit to £377,596 in 2019 from £463,079 in the preceding year.

Cardinus Risk Management’s partnership with Gallagher, in the provision of reinstatement cost assessments, has been further cemented by the roll-out of Cardinus’ on-site risk survey expertise together with its INDIGO risk management platform to Gallagher’s UK retail division. The outsourcing of Gallagher’s UK retail network survey requirements to Cardinus Risk Management will enable Gallagher to focus on servicing clients with insurance and risk management advice, whilst ensuring assessments are undertaken quickly and efficiently by trained surveyors.

AXIS Capital Holdings Limited has announced that it expects to release financial results for the second quarter ended June 30, 2020, on Tuesday, July 28, 2020, after the close of the financial markets.

LexisNexis geospatial intelligence data now accessible via single entry point - In a first for the UK commercial e-trade and Home insurance market, geospatial data including perils data such as flood, fire and subsidence are now instantly available alongside 42 further data enrichment datasets including publicly available data and identity verification data, property and business data from one access point - the LexisNexis® Informed Quotes platform.

The spot freight market has changed exponentially in the past few years thanks to the introduction of new technology. As the industry has transformed, so have its insurance needs, but unfortunately Insurers have been slow to catch up. For the past five to 10-years, securing insurance for the spot freight market has been a cumbersome and costly affair for shippers, Brokers and insurance carriers. As a result, a significant volume of spot freight goes uninsured or underinsured every year. This is something that ArgoGlobal, a division of specialty Re/Insurer Argo Group, hopes to fix with its backing of Loadsure, a Managing General Agency (MGA) and Lloyd’s coverholder that provides a digital end-to-end solution for the spot freight industry.

Described as a “market first”, specialist Insurer Hiscox has teamed with RKH Reinsurance Brokers to launch a new variable consortium. The consortium allows Hiscox to bind capacity on behalf of their follow market, while every consortium member can flex their line-up to a selected maximum on a risk-by-risk basis instead of being tied to a predetermined share of all business. It has a maximum line of over US$20 million and spans a host of general Liability risks, including trucking, construction and wildfire.

Specialist Risk Group who recently announced their agreement to acquire Insolvency Risk Services is pleased to unveil the details of the first three strategic partnerships to complement the IRS offering to the insolvency industry. MS Amlin (insurance capacity partner), Aryza (technology acceleration partner) and LIVA (M&A insurance partner).

 

Coronavirus-related News

Insurance companies have welcomed Chancellor Rishi Sunak’s Wednesday announcement of a pair of £2 billion schemes to curb youth unemployment and allow homeowners to perform green renovations. The grants are part of a £30 billion stimulus aimed at shoring up the country’s job market and boosting the economy as it recovers from the coronavirus crisis.

The Financial Conduct Authority has outlined the steps Brokers should take to operate effectively and fairly throughout the coronavirus pandemic. The ongoing outbreak has seen Brokers faced with helping clients with Business Interruption queries, difficult trading conditions, new rules around premium credit and working from home. Matt Brewis, Director, General Insurance and Conduct Specialists at the watchdog, said “The test of impact on business continuity has really been one of the early impacts of coronavirus.”

The COVID-19 pandemic, and the resulting switch to remote work, has created new vulnerabilities for cyber criminals to exploit, according to a new report from CyberCube and Aon. The report found that remote work has exposed new access points for cyber criminals to gain entry to corporate systems, including domestic PCs, laptops and Wi-Fi routers. It’s also led to a reduction of employees’ distinction between work and personal emails and an increase in the usage of devices with insecure passwords. Home workers are also more likely to use online applications that would be prohibited in an office environment due to security concerns, the report found.

There are certain emerging risks which, even when considering the presence of the COVID-19 pandemic, remain too significant to ignore. As highlighted by Swiss Re’s most recent SONAR report, while the COVID-19 crisis has accelerated new emerging risks and trends, it must not overshadow the need for the world to transition to a low carbon future.

Despite dealing heavy losses to the insurance industry, the coronavirus crisis presents new opportunities for many commercial Insurers as premiums increase due to the pandemic’s fallout. The steep rise in premiums is pushing several industry players to raise capital or venture into new lines. For example, London-based insurance capital firm Beat Capital Partner Ltd is looking to raise funds in the “low hundreds of millions of pounds” from long-term investors for new insurance ventures. Also Bermuda and London-based Insurer Convex Insurance has launched cover for event cancellation, one of the worst hit sectors by the outbreak.

The Financial Conduct Authority (FCA) has rejected the defences presented by eight Insurers for refusing to pay COVID-19 Business Interruption (BI) claims, insisting the insurance companies have been “unduly restrictive” in their interpretation of policy terms. In June, Arch Insurance, Argenta Syndicate, Ecclesiastical, Hiscox, MS Amlin, QBE UK, Royal & Sun Alliance and Zurich Insurance argued that their policies were not designed to cover pandemics, and business owners would have likely incurred the same losses had they maintained operations during the lockdown.

Further to this.... As RSA changed its mind on part of its argument that drew criticism from Marsh, the Financial Conduct Authority said Insurers were failing to take account of “the true nature of the insurance provided” in its business interruption test case, according to Friday's court filings. Stating that the Insurers’ defences are “in general terms, rejected”, the regulator stressed the fact that the policies in question were bought by “generally unsophisticated purchasers of insurance”. Insurers have defended their position that their policies do not respond to losses suffered by businesses as a result of Covid-19 by saying coverage was never intended to extend to a pandemic. Some of the participating Insurers have also highlighted the role of Brokers, pointing out their responsibility to advise clients as well as the fact that some of the policies in question had been sold through intermediaries.

Zurich Insurance Group will be giving refunds to customers whose travel plans did not materialise because of the coronavirus pandemic. According to the insurance giant, Travel insurance clients who took out a single-trip policy or hold an annual policy for trips scheduled between March 12 and June, but who were unable to travel will get full premium refunds as “they haven’t been able to make use of or claim on their Travel insurance.”

Chubb has highlighted large losses arising from Covid-19 in its Q2 results predictions for the year so far. The Provider predicted a pre-tax loss of $1.36bn (£1.09bn) due to the pandemic with exposure across Entertainment and commercial Property-related Business Interruption and Accident and Health (A&H) products including Travel insurance products amounting to $605m. In addition losses of $533m related to Liability insurance products, including Professional Liability (Directors and Officers, Employment Practices, Professional Liability, etc.), workers’ compensation and other Liability-related products; and losses of $107m related to insurance credit exposures including Surety, Political Risk and Trade Credit.

The COVID-19 pandemic dragged North American M&A deals to their lowest level in more than a decade, according to Willis Towers Watson’s Quarterly Deal Performance Monitor (QDPM). The pandemic’s impact on dealmaking in the first half of 2020 was “significant but not unexpected,” Willis Towers Watson said. According to the QDPM, North America posted the sharpest fall in M&A performance across the globe. Acquirers underperformed their regional index by -7.2 percentage points, with just 137 deals completed in the first half of 2020, down from 188 in the first half of 2019. This is the lowest number of North American deals for a six-month period since 2009, Willis Towers Watson said.

De Nederlandsche Bank (DNB) has announced on Monday that Insurers can resume dividend payments later this year, as the impact of the COVID-19 crisis on their balance sheets was not as adverse as expected. Back in April, the Dutch central bank advised Insurers to postpone dividend payments as huge uncertainty loomed on whether capital buffers could withstand the economic disruptions caused by the coronavirus pandemic.

Car insurance claims have dropped amid lockdown with fewer motorists on the road – but now we can add another type of insurance claim to the list of those reducing in numbers. According to Aegon, critical illness insurance policies saw 37% less claims during May this year compared to the same period last year – in sharp contrast to life insurance claims, which saw an increase in both April and May compared to the same period last year.

A court case in France involving an Insurer refusing to pay out loss of business claims may provide a lifeline for Spanish restaurant owners in the same boat. The two European countries are facing economic fallout from the COVID-19 crisis. Spain, in particular, suffered through some of the most tragic scenes, with its hospitality industry virtually wiped out. But a French court decision in late May has offered hope to Spanish restaurant owners seeking business interruption claims resulting from the pandemic.
A Paris court ruled that AXA, France’s biggest insurance group, should pay a restaurant owner two months’ worth of revenue losses caused by the coronavirus outbreak. The Insurer argued its policy did not cover business disruptions resulting from the health crisis.
In a statement, AXA said it would appeal the decision, but later settled with the restaurant owner.

Insurers are continuing to evolve as customers seek digital services amid the COVID-19 crisis, with the latest Minster Law survey revealing that remote medical assessments for motor-related personal injury claims during the lockdown received “overwhelmingly positive customer feedback.” Minster Law’s survey showed that 78% of customers who underwent a medical assessment previously said they were “satisfied/very satisfied” with their digital appointment, 75% were “satisfied/extremely satisfied” with the advice they received, and 88% found the appointment “easy/very easy.”

Lloyd’s of London’s innovation accelerator Lloyd’s Lab will be holding a COVID-19 programme to help start-ups and the insurance marketplace quickly bring to market coronavirus-related products and innovations. “As part of its package of measures to respond to the COVID-19 pandemic, Lloyd’s has reimagined and expanded the scope, process, and timings for new applicants to the Lloyd’s Lab innovation accelerator,” explained the centuries-old exchange.

A global infrastructure investment of US$90 trillion will be needed over the next decade to achieve global growth expectations – and success will be contingent upon a shift in the way projects are financed to build resilience to climate change, industry leaders said during an event organised by the Coalition for Climate Resilient Investment (CCRI). “With the need for systemic resilience to shocks and stresses made clear by the COVID-19 crisis, CCRI brought together over 200 policymakers, scientists and investors and business leaders to discuss challenges and solutions to better integrate physical climate risks in investment decision making,” CCRI said.

Axa XL has hired Sean McGovern as CEO UK & Lloyd’s market, subject to regulatory approval. McGovern has been in the role on an interim basis since former CEO Paul Greensmith left the business as part of a senior management reshuffle in April. He first joined XL Group in 2016 and has since led the claims, legal & compliance and regulatory & government affairs functions.

CLS Risk Solutions has appointed Jim Connolly as Strategic Development Director, effective immediately. He will report to Rob Best, Managing Director of CLS. According to the business, Connolly is a highly regarded insurance specialist in the Property sector having held broking, underwriting and risk management roles at Willis Towers Watson, JLT, Chubb, Land Securities and Canary Wharf Group. Latterly, he has established two niche construction led MGAs.

Direct Insurance Group has hired Andy Graham as Head of Specialist Liability within its Lloyd’s Broker division, Direct Insurance London Market (DILM). Graham was previously Managing Director of Cobra London Markets.

RSA Insurance Group Chief Executive Officer Stephen Hester has emerged among the top candidates for Lloyds Bank’s Head position after current CEO António Horta-Osório announced that he would step down next year.

Trilogy Managing General Agents (Trilogy) has appointed Peter Staddon as a Non-Executive Director, effective immediately. Staddon is currently Managing Director of the Managing General Agents Association (MGAA), a role he will retire from in September 2020.

James Moss has joined Willis Re as its new Co-Head of the Specialty Casualty Practice. He makes the switch from Lockton Re, where he was Partner and Head of International P&C Reinsurance.

Global law firm Clyde & Co has announced the hiring of Ian Birdsey as a Partner in London. Birdsey’s appointment is part of the firm’s expansion and development of its global Cyber risk offering.

Cega Group Chief Executive Alistair Hardie is to replace Bob Darling as CEO of Jensten Group, the Broker has announced. The move comes days after Jensten acquired Senior Wright, adding £20m of premium to the Livingbridge-backed business. In February Darling outlined how he could see the group more than doubling to become a £500m GWP Broker within five years. Mr Darling will remain on the Jensten board and will continue to support the group’s ongoing acquisitions programme and its retail business, Coversure, on a part-time basis when he steps down on the 5th August.

Amanda Blanc has been appointed Chief Executive Officer of Aviva with immediate effect. The Insurer said that for family health reasons Maurice Tulloch, the previous Chief Executive, has today stepped down from the role and retired from his position on the Aviva plc Board. Blanc is currently an Independent Non-Executive Director at Aviva plc. The newly appointed leader wants to direct change at pace at the Insurer and does not rule anything out. Amanda Blanc is prepared to take radical steps to address Aviva performance and stated she “does not underestimate the scale of the challenge”.

Financial services firm Old Mutual Ltd has announced the appointment of acting Chief Executive Officer Iain Williamson as its permanent head. The move ends more than a year of uncertainty over who will lead one of South Africa’s biggest Insurers following the suspension and subsequent sacking of former CEO Peter Moyo in June 2019 after a conflict of interest dispute.

International General Insurance Holdings (IGI) has added Ian Noble to its London office to replace Chris Mauduit as Casualty and Professional Lines Head. Noble, who most recently served as Professional Indemnity Senior Class Underwriter at Chaucer, brings 34 years of Broking and Underwriting experience in Professional lines in the Lloyd’s of London and company markets to IGI.   

Tysers Insurance Brokers has given its board a significant boost with a big-name addition. The company has brought in CEO of the Association of Lloyd’s Members, Belinda Schofield. Also the chair of the Chartered Insurance Institute’s disciplinary decision review panel and an external member of the Lloyd’s enforcement panel, Schofield has more than 30 years’ experience in a host of leadership roles. Her credentials include being an insurance lawyer with CMS, and co-head of broking Jason Collins believes she will “add great value” to the board.

 

All information provided in this Market Digest has been gathered from multiple General Insurance Media sources and individual company press releases.

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