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General Insurance Newsletter Friday 12th June 2020

12 Jun 2020

Thompson & Richardson has bought Scunthorpe-based commercial Broker Johnstone Insurance Brokers. The deal represents the first acquisition by the Ethos Broking partner since it joined the group in 2017. Established in 1983, Johnstone Insurance Brokers is owned and run by Chris Harper, Mark Broome and Mike Williams, and employs an additional 12 members of staff, all of whom will remain with the business following the acquisition. The Broker manages GWP of £3.4m.

RSA UK and International has confirmed it will stop offering new business quotes and renewals for its e-traded single Commercial Vehicle Van and Business Car products from 1 September 2020. In a communication sent to Brokers, RSA stated that any existing policies which renew and have effective dates prior to 1 September will be placed into run-off until they expire.

Lloyds of London has released a statement - Recent events have shone a spotlight on the inequality that black people have experienced over many years as a result of systematic and structural racism that has existed in many aspects of society and unleashed difficult conversations that were long overdue. Read more HERE.

Cobra Network has added eight Brokers to its membership since February and has a good prospect list going forward. That is according to CEO, Andy Tedstone, who took on leadership of the organisation following its acquisition by PIB Group in June 2019. The largest Broker to join so far is Lifestyle Insurance which has around £10m GWP. Tedstone noted that the majority of members hover around the £3m GWP mark. He expressed his desire to see the network double in size by 2021. Although new members have joined, he explained the business is going through a process of “tidying up” so in terms of GWP the network has not seen a lot of change and continues to see about £300m of premium go through each year.

Open collective TotusRe was launched with the goal to proactively find an insurance solution to catastrophic pan-economic events including future pandemics, according to founders Liz Foster and James York. While the group was founded in response to the current Covid-19 crisis, York highlighted that the pandemic is just one of many perils listed on the National Risk Register and that TotusRe is looking for a wider solution.

Lloyd’s of London has rolled out a new application programme interface (API) designed to enable the “frictionless” flow of electronic placement data for submissions and quotes between Carriers and Brokers using PPL (Placing Platform Limited) or any other proprietary platform. The centuries-old insurance marketplace said the move is part of the Future at Lloyd’s work on developing the next generation of PPL. Available immediately, the new API was developed by Lloyd’s in collaboration with PPL and LIMOSS (London Insurance Market Operations & Strategic Sourcing) as well as several other Brokers and Underwriters. The first to adopt the technology is Atrium Underwriting Limited.

The Covid-19 pandemic currently being managed by the UK government has not put off Brokers looking to develop their own appointed representative operations. AR network, Momentum, said that six new start-up AR members came on board during the lockdown, which officially began on 23 March. In addition three broking firms have also joined. Alistair Body, Business Development Director, said: “We have engaged with a substantial number of individuals.”

Bennett Christmas has purchased Warwickshire-based independent Broker, Offshore and Marine Insurance Services (OMIS). This is the Broker’s first move into the Energy sector and its second deal since becoming Ethos Broking’s ninth regional powerhouse in August 2019. It follows its purchase of AK Business Services’ book of client insurance policies at the beginning of March. OMIS, which was established in 1997, provides insurance for the energy sector and manages £1.5m in gross written premium. Following the deal the Broker will be integrated into Bennett Christmas and Ethos stated that all members of staff will be retained.

London-headquartered and Irish-domiciled Willis Towers Watson has quite a lot on its plate, with multiple shareholder class action lawsuits filed against the Broking giant in connection with its proposed mega merger with fellow goliath Aon Plc. The latest to announce the filing of a lawsuit is New York-based investor rights law firm Halper Sadeh LLP, whose camp is seeking damages and/or equitable relief on behalf of Willis Towers Watson shareholders under federal securities laws. Willis Towers Watson is being accused of having issued a misleading proxy statement to recommend that its shareholders vote in favour of the Aon deal. The complaint alleges that the proxy statement contains materially incomplete and misleading information concerning financial projections and analyses performed by Willis Towers Watson’s financial advisor.

New research shows nearly 19.3 million UK drivers are at risk of being overcharged for their Car insurance thanks to a ‘low mileage penalty’. UK pay-by-mile Car insurance provider By Miles’ analysis of 1.7 million Car insurance quotes on comparison site MoneySuperMarket reveals that low mileage drivers (motorists who drive under the UK average of 7,000 miles annually) are paying an average of £180 a year more than those that drive over 7,000 miles each year.

With the coronavirus pandemic restricting movement between countries, the issue of smuggling appears to have temporarily fallen off the radar. However, international freight insurer TT Club is keen to put the matter back in the spotlight. The company notes that “clandestine migration” has long been a problem for the transport sector – and it is a persistent threat to the unitised supply chain.

The Financial Ombudsman Service (FOS) received a total of 271,468 new complaints and resolved 295,596 cases during 2019/20, according to newly published analysis of its annual data for the year.  Ombudsman’s decisions stood at 29,746.  Payment protection insurance once again provided the largest source of complaints for the Ombudsman. Insurance complaints remained relatively steady throughout the year and overall were down by 12% to 59,659 cases, according to the analysis.  The uphold rate for insurance complaints received by the FOS stood at 30%, with the most complained about product being Motor cover (9,690 cases).  Two winter storms and the collapse of an Insurer that specialised in providing black cab policies, caused a spike in the FOS casework early in 2020.

The Chief Executive of Home insurance disruptor buzzvault has offered assurances that its policyholders “will remain in good hands” following the announcement that new policies will no longer be sold in the UK. In a statement, buzzvault CEO Becky Downing noted: “The policy they purchased remains active until their policy end date and our amazing partner and capacity provider, Great Lakes Insurance SE, remains committed to ensuring that our customers suffer no detriment during the transition and will continue to provide cover until the expiry of their policies.”

Lancashire Holdings Limited is following in the footsteps of Hiscox, Beazley, and RenaissanceRe, who have all announced in recent weeks that they are raising capital. According to the Bermuda-headquartered insurance group, it is issuing as much as approximately 39.6 million new common shares in a non-pre-emptive placing to be conducted via an accelerated bookbuilding process. The company’s corporate brokers, Morgan Stanley & Co. International Plc and Citigroup Global Markets Limited, are acting as joint bookrunners. “The placing shares will not exceed 19.5% of the company’s existing issued share capital,” noted Lancashire, “which, based on the price of 726 pence per common share as at 4pm on June 09, 2020, would raise gross proceeds of approximately £287 million (approximately US$365 million).”

In its effort to provide advice on large and complex claims across the Middle East, Africa and Europe, Zurich Insurance Group has introduced a new legal panel. Consisting of big names such as Kennedys, Clyde & Co, DAC Beachcroft, DWF Law and BLM, that panel took effect at the turn of the month and aims to ensure greater transparency. According to Zurich, the panel “complements existing country panel arrangements.”

Marine specialist UK P&I Club has launched the Lessons Learnt video, which depicts a tragic fatality on a loaded bulk carrier. The tragedy takes place during a periodic inspection of a bulkhead stool void space with the chief officer instructing the bosun to open the main deck lid to the vertical access trunk and to place a small ventilation fan over the opening.

A 34-year-old mystery has been put to bed after Stig Engstrom, a graphic designer at an insurance company, was pinpointed as the man who shot and killed Swedish Prime Minister Olof Palme in 1986, according to prosecutor Krister Petersson. This finding marks the end of a case that has hounded Sweden for over three decades. “The person is Stig Engstrom,” Petersson told a news conference, as reported by Reuters. “Because the person is dead, I cannot bring charges against him and have decided to close the investigation.” Palme was brought down by a bullet in central Stockholm in 1986 after a trip to the movie theatre with his wife and son. The aftermath of the murder included a huge manhunt and many conspiracy theories involving the CIA, Kurdish separatists, and South African security services.

Specialist Engineering and Technology Insurer HSB, part of Munich Re, has further expanded its e-trade offering by launching HSB Fast Track, its Broker online trading platform, in Ireland. From today, the HSB Fast Track e-trade platform will offer brokers in Ireland a full suite of HSB products, including Construction Annual, Construction Project, Contractors’ Plant, Computer and Cyber - with more products planned for the future.

A fraudster who submitted a false £4,000 personal injury claim has been handed an immediate 12 month prison sentence with no suspension following a successful private prosecution by Allianz Insurance and defendant law firm, Keoghs. The hugely significant judgment, which also saw the Insurer recover all costs via central funds, was the first of its kind for Allianz, and has laid down an important marker in the fight against insurance fraud.

There was a 25% spike in ransomware attacks in the first quarter of 2020 over Q4 2019, according to specialist Insurer Beazley. The figure is based on incidents reported to Beazley’s in-house breach response team, Beazley Breach Response (BBR) Services.

 

Coronavirus-related News

The Financial Conduct Authority (FCA) has expanded the number of Business Interruption policy wordings it is looking at as part of its test case to 19. The regulator had previously said that it was looking at 17 BI wordings that it could place before a court to decide the validity of BI claims arising from Covid-19. In an update on 10 June, the regulator provided a new list of wordings and policies affected by the court case, which now includes a total of 91 policy types. Hiscox remains the Insurer with the highest number of policy wordings affected. Since its initial announcement on 1 June, the FCA has added seven more Hiscox policies to the list, taking the total up to 41. Overall, four Ecclesiastical policies, three from Zurich and one from QBE have also been added. Two Ecclesiastical policies have been crossed off from the original list.

In other news... The Financial Conduct Authority (FCA) particulars of claim (PoC) attacks the argument posed by some providers that their policies were never intended to pay out for pandemics. In the particulars of claim for the approaching test case on the issue the watchdog argued: “The Defendants’ subjective intentions (or their reasons behind the design of the Wordings) is not relevant or admissible.” It added: “This is particularly the case given that these policies are offered by the Defendants in a standard form to policyholders, and on which a large number of policyholders have policies. In construing the policies it is relevant that the Wordings are standard form and that the policyholders would be either predominantly, or at least to a material extent include, small and medium enterprises.”

In further news... The Financial Conduct Authority (FCA) is conducting a survey to find out how firms have been impacted financially by Covid-19. The survey has been emailed to 13,000 cross-sector firms and Branko Bjelobaba, Managing Director at compliance consultancy Branko Limited, noted that this will include a “very good sample size” of general insurance Brokers.

As the rest of the world might feel at a standstill dealing with COVID-19, fraudsters are revelling in this opportunity and scams are on the rise. But just as the scammers never stop – neither do Aviva. Commenting "We remain as vigilant as ever, constantly monitoring the latest tricks fraudsters use and sharing what we know to help protect you and your clients. We continue to identify and tackle any fraudulent activity head-on, but in addition we’re developing resources to help keep you and your clients more informed and less likely to be caught out. You may have attended our Cyber Security webinar that highlighted useful steps that can be taken to secure our lives and businesses – this week a new Aviva Fraud Hub has been launched to make this advice as accessible as possible to all Aviva customers."

With COVID-19 restrictions triggering a rise in businesses implementing work-from-home arrangements, Aon plc has decided to expand the scope of its cyber risk assessment platform, CyQu Enterprise, to address increased cyber vulnerabilities brought about by remote work. The modifications are geared at enhancing the tool’s capabilities in assessing the cybersecurity impacts of recent work access or policy changes that businesses have made to accommodate the shift to remote working. Designed for SMEs, the cyber assessment tool requires businesses to take a short survey. After which, they will receive an automated CyQu score, which is benchmarked against industry peers.

Rarely has Credit insurance been in the spotlight more than it is right now, with so many businesses facing uncertainty amid the coronavirus pandemic. It’s reassuring then to learn that the sector has an “outstanding” record when it comes to claims payment performance. That is the verdict of research commissioned by the Lloyd’s Market Association (LMA) and the International Underwriting Association (IUA). Its analysis of claims performance data found the market paid more than $3.3 billion in claims from 2007 to 2019 – and that Insurers paid out 100% of all valid claims made by regulated financial institutions, and in full, in 2018 and 2019.

There is a new specialist group at the Forum of Insurance Lawyers (FOIL). It has launched a sports law sector focus team which will facilitate training and events looking at issues arising from COVID-19 and beyond. It will demonstrate expertise to non-members and possible clients and act as thought leaders, while also looking to improve the understanding of risks.

The legal firm Mishcon de Reya is pursuing a £52m claim against Hiscox and planning its own test cases and representing dentists in dispute with QBE. The law firm has taken the next step towards legal action against Hiscox on behalf of the 600+ SME members of the Hiscox Action Group over the Insurer’s refusal to pay out on Business Interruption. The firm is now calling for more dental surgeries to join the collective action. Mishcon has written to Hiscox Insurance on behalf of 397 Hiscox Action Group members saying that it intends to seek payment of £52m of unpaid business interruption claims plus additional claims and costs “caused by Hiscox unreasonable delay in settling these claims”. In addition it has also rounded on QBE and gained funding to pursue the Insurer over unpaid BI claims to dental surgeries. Mishcon de Reya has received agreement in principle from an unnamed “experienced and well-capitalised” litigation funder to back a group claim involving dental practices insured by QBE. The litigation offering is aimed at dentist policyholders whose coronavirus-related Business Interruption claims have been denied. Mishcon described the dental group claim as a viable collective route to litigation for impacted practices.  

Broking giant Willis Towers Watson has altered its 2020 short-term incentive (STI) compensation programme for Executive Officers of the Irish-domiciled enterprise, without changing the general principles applicable to the STI plan for the company’s wider employee base. In a Form 8-K filing with the US Securities and Exchange Commission, Willis Towers Watson noted: “These changes to the executive officer STI programme’s methodology were made so that the overall funding percentage for that STI programme (as a percentage of target) would be closer to the funding percentage for short-term incentive awards made to a broader group of employees eligible for such awards and so that executive officers from different business units would be more closely aligned, thereby promoting an even more unifying, team mindset that is intended to help the company manage the economic uncertainty created by the COVID-19 pandemic.” Under last year’s STI programme, each Executive Officer was eligible to receive an annual target cash-payable award expressed as a percentage of his or her base salary, with the performance goals weighted based upon the recipient’s responsibilities.

The Sidetrade tracker, which shows the week-by-week payment behaviour of more than 3.7 million businesses in six European countries, has highlighted the British industries gravely impacted by payment delays tied to the coronavirus crisis. Freely accessible to all private sector decision-makers and public authorities, the tracker shows that 76% of invoices are over 10 days overdue in the finance, insurance, and real estate sectors in the UK as of May 25. In the ICT (information, communication, technology) world, 60% of invoices are over 10 days overdue, while the same is true for 55% of invoices in Leisure and Hospitality.

Detective Chief Inspector (DCI) Edelle Michaels has been appointed as the new Head of the City of London Police’s Insurance Fraud Enforcement Department (Ifed). DCI Michaels has over 27 years of experience as a police officer and has worked in the City of London Police’s Uniformed Policing Directorate for the past two and a half years. Prior to that, her background was as a detective working in fraud, the Criminal Investigation Department (CID) and also the Major Crime Unit, where she dealt with reactive and proactive investigations. 

Ceta Insurance has appointed Kevin Paterson, formerly Managing Director of Source Insurance, as Director of Sales and Marketing and promoted James O’Hara to the newly created role of Head of Product Procurement and Insurer Relations.

HI Commercial hired Mike Ratcliffe as Commercial Account Handler. The Broker stated that Ratcliffe’s career began at Norwich Union in the early 1980s. He moved across to the broking sector in 2003.

The office of broking giant Gallagher in Manchester will look a little different post-lockdown with three new faces. The company has added three insurance specialists to its New Bailey Street team, with David Mullen, James Churchill and Rebecca Young joining the firm. Mullen joins as a Client Services Director, making the switch from Aon where he managed the Manchester-based corporate team. He is now responsible for a team of Account Executives and will oversee client services and develop corporate relationships. Churchill, meanwhile, makes the switch from BLP and becomes the Latent Defects Lead for the North region. He has more than a decade of experience in this specialist area and will now support construction clients with their risk management and insurance needs. Finally, Young becomes Development Executive to lead Affinity partnerships in the city. She also boasts more than 10 years’ experience, most recently with Zurich where she managed a portfolio of Brokers across the construction sector.

As it launches a new London Political and Credit Risk team, HDI Global Specialty SE has swooped for two hires from Neon. The company has picked up Nick Robinson and Anthony Vaughan from the MGA, with both supporting the Political Risk team based in Stockholm. Robinson will take up the role of Head of Political Risk and Structured Credit in London, bringing with him more than 20 years of experience. Vaughan meanwhile, now becomes a Senior Analyst and Underwriter at HDI.

It’s the end of an era for Atradius as it bids farewell to a company veteran – but as one door closes, a window has certainly opened. Stuart Ramsden is set to succeed Alun Sweeney in the role of Regional Director UK & Ireland for the firm, with Sweeney stepping down after more than a decade in the role and more than two decades with the firm. It had been expected that Sweeney, who previously spent time at the likes of Cornhill, Norwich Union and Eagle Star, would move into retirement this summer having had plans in place for a lengthy period. However, these plans were disrupted by the COVID-19 pandemic and he will stay with the firm until the autumn to help with the transition.

Club-style MGA formation platform Castel Underwriting Agencies is ready to set sail with a new Head of its Marine Centre of Excellence. Taking the role is Gert van Middelkoop, who will lead the development of the Marine book of business across Europe and the UK. The centre boasts teams across Rotterdam and London and focuses on all business classes such as Hull and Liability, and Cargo.

Gallagher has announced that Karen Ellis has joined its Specialty division as Head of its Sports practice, as the global insurance broking and risk management firm further expands its sports expertise. Karen founded Ellis Clowes in 2010, and established it as a leading independent Lloyd’s broker specialising in high risk sports.

TL Dallas has appointed former Marsh Commercial Regional Director, Tim Mortimer, as Managing Director of its commercial division. The Bradford-headquartered Broker explained that Mortimer had joined to “spearhead the next phase of growth” for its commercial business. At Marsh Commercial, previously known as Jelf and Bluefin, Mortimer led a team of 150 staff across eleven offices.

AXA XL has announced that Xavier Veyry has been appointed as CEO Asia & Europe. In taking up the role, Mr. Veyry will join AXA XL’s newly configured Leadership Team, reporting to Scott Gunter, CEO.

AXIS Re, the Reinsurance business segment of AXIS Capital Holdings Limited, has announced the promotion of Michael Leahey to Head of Agriculture Reinsurance, effective July 1. In this role, Mr. Leahey will be responsible for setting the strategy, optimising their portfolio and leading the underwriting of AXIS Re’s Agriculture business. He will continue to be based in Zurich and will report to Ann Haugh, President Global Markets for AXIS Re.

It’s a new product and a new Director, for Broking giant Aon. The company has just launched Aon Real Estate Solution (ARES), a new transaction solutions product designed for real estate clients, especially those looking to buy real estate through M&A transactions and who are looking to protect their investments up to the full value of the asset. Now, with this new proposition launching, incoming is Harriet Clarke who will take over as Director for the Aon M&A and Transactions Solutions team. She is a Solicitor, switching from PwC where she was Head of the Corporate Real Estate legal function. She will now focus on real estate deals and advise on transaction solutions.

Syndicate 1955 is taking shape at Arch Insurance International, with a double leadership announcement. Firstly, Simon Williams is set to take responsibility for the overall strategic development of the syndicate, looking to enhance its profitability, in his role as Active Underwriter. He originally joined the firm in 2018 as Senior Vice President, Strategy and Distribution on the back of more than two decades at Hiscox. He will be ably supported by David Slade as Deputy Active Underwriter. Slade originally joined the Syndicate in 2013 having been Deputy Head of Global Property for Travelers Syndicate and also spending time at the likes of Catlin Group and Sedgwick Insurance Brokers.

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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