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General Insurance Newsletter Friday 14th June 2019

13 Jun 2019

Insurance News

PIB Group has completed a debt refinancing of £200m to fund future deals and support organic growth. The refinancing was led by KKR & Co and Apollo and the other lenders are Bain Capital, Bridgepoint Credit, Butterfield Bank and RBS NatWest. PIB Chief Financial Officer Ryan Brown said that one of the reasons for the refinance was that the business had outgrown the capability of its old club of lenders.

In other news...PIB Chief Executive Brendan McManus has stated that he does not expect any redundancies to follow the company’s purchase of Cobra Group. While he admitted there is some overlap between the two businesses, he noted that the transaction was largely complementary. The deal took the amount of premium placed or influenced by PIB from £550m to £900m. McManus said: “They’ve got a network and an MGA, which sells different products to the MGAs we’ve got, the London market business has some strengths that we don’t have in our other business CityNet, so between the two we will be a very powerful force.”

An alert from the Financial Conduct Authority (FCA) revealed that fraudsters were using the details of the authorised South London firm, Wentworth Insurance Brokers, to scam people in the UK. The watchdog detailed: “Almost all firms and individuals carrying out financial services activities in the UK have to be authorised or registered by us. This firm is not authorised or registered by us but has been targeting people in the UK, claiming to be an authorised firm. “This is what we call a ‘clone firm’; and fraudsters usually use this tactic when contacting people out of the blue, so you should be especially wary if you have been cold called. They may use the name of the genuine firm, the ‘firm reference number’ (FRN) we have given the authorised firm or other details.”

Two executives at Lloyd’s provider Tokio Marine Kiln (TMK) have left the company amid allegations of sexual harassment. One of the Executives has been accused of groping colleagues at a staff party and the other of stalking a junior employee. Lloyd’s has found itself in the centre of a sexism scandal since March when Bloomberg Businessweek published a report slamming the market for having a “deep-seated culture of sexual harassment”. According to Bloomberg, the alleged incidents at TMK were reported when several current and former employees came forward following the publication of the report. A spokesperson for TMK said: “TMK has clear standards and policies for workplace conduct, any breach of these will be taken extremely seriously and would not reflect our company values."

Unrated Danish provider Gefion Insurance A/S has been forced to take action to bring its solvency ratio back to 130%, after its Solvency Capital requirement increased from m(million)DKK120.6 in 2017 (£14.4m) to mDKK178.7 in 2018. The Motor Insurer stated in its Solvency Report that these actions included a cash injection of mDKK39.6 which, along with an increased level of reinsurance with an existing reinsurer, brought its solvency ratio up from 72% on 6 May 2019. This latest move follows a cash injection of €2m (£1.74m) from its shareholders in May 2018. The document revealed that the provider also received a subordinated loan of €10m in July 2017. According to the report, Gefion’s own funds, consisting of ordinary share capital, reconciliation reserve and subordinated debt, have decreased from t(thousand)DKK162,447 in 2017 to tDKK128,732.

Managing Director of Managing General Agent (MGA) Kitsune, Trevor Bowers said that by January 2020, a year after its launch, the firm will have reached its target of a gross written premium (GWP) of £20m - £25m. Bowers detailed: “In March we broke £1m GWP in monthly trading for the first time and we have achieved 10,000 live policies before the end of May.” He added that by the end of May the Brightside-owned firm also had ten Brokers on its panel.

Allianz UK Chief Executive Officer Jon Dye has stated it is “business as usual” following the Insurer’s purchase of L&G’s general insurance division for £242m. The provider is set to integrate L&G GI into LV. At the end of May, Allianz also announced that it will buy the remaining 30.1% stake in LV GI for £365m by the end of the year. Dye pledged that Brokers will continue to be the biggest distribution channel for Allianz, LV and L&G once the transactions have completed.

In other news....Allianz latest white paper looks into a topic that has a significant effect on business and individuals alike: rising incidences of theft. They start off by considering the reasons that could be behind the increasing frequency of this type of crime, trends that are emerging and techniques that offenders have developed, before moving on to the defensive measures available.

Brokers need more support from Insurers to help them crack the Cyber market. New research from Ecclesiastical Insurance has revealed that while 78% of Brokers agree that Cyber is an area of growth for their business, nearly two-fifths (38%) have never sold a Cyber policy. Just over three-quarters of Brokers said that they understood what Cyber insurance covers, however, 64% of the same sample admitted they needed more training and a quarter (27%) said that they would not feel confident in selling a Cyber policy. Over half (54%) of Brokers said that they would welcome more support from Insurers to help them sell more Cyber products. According to the Cyber Security Breaches Survey 2019² produced by the Department for Media, Culture and Sport (DCMS), 32% of UK businesses identified Cyber breaches or attacks in the 12 months prior to the survey. This figure increased to around 60% among medium to large businesses.

In related news.....80% of the UK businesses that reported having a Cyber security breach or attack in the last 12 months cited Phishing as the method of attack. A criminal will cast his ‘line’ out, using bait to attract a victim e.g. spoof email or website, before reeling them in with the intention of getting them to reveal confidential information like log-in information, bank details, security questions etc. Recently, one of Aviva's Sales Managers received an email from a “Broker” requesting they change the bank account details used to pay them. Although the email address details were correct, the Sales Manager was suspicious due to the unusual request and poor grammar, so he emailed the Broker and asked for a password that had been used previously. The vigilance of the Sales Manager thwarted this attack, which would have resulted in payments not being sent to the Broker. The attack, which appears to have been caused by scammers who'd hacked into the Broker’s email shows how we should all be vigilant for scams.

AXA XL North America Engineering Leader Scott Ewing gave his view on the chances of a hurricane in 2019. Forecasters have been working hard at determining what to expect of this year’s storm activity to take place from June 1 to November 30. NOAA’s Atlantic Hurricane report is predicting what they call a ‘near-normal’ season, while Colorado State University forecasters are anticipating above average activity and so on. Eight years in a row, hurricane season has now cost over $2B more than its long-term average, resulting in an $8b line item in the U.S.’s overall disaster recovery bill. Last year, that total, which tallied up hurricanes Michael and Florence and the western wildfires, was approximately $73B. Even one single hurricane can result in tremendous destruction if it hits you. If you happen to be in the way of any one of the 9-15 named storms anticipated this year — 2-4 of which may have winds upwards of 111 mph or more to classify as a major hurricane — you will have little time and resources then to get provisions together, gather and protect important documents, secure backup systems and/or plan and put into action any action, re-opening or even a relocation strategy to keep you, your employees and your family safe. For businesses, protecting the bottom line in order to remain open, or to re-open quickly after a hurricane disaster, requires taking steps now to prevent or reduce resulting damage should your business be in the path of a violent storm. 

In November 2018, the Association of British Insurers announced the cost of Motor theft claims – some £271 million – rose by a third on the previous year, with the number of claims settled rising by 11% over the same period. The trade body said that the increase was in part linked to keyless vehicle theft. Technology is generally viewed as a way of boosting security, but the arrival of keyless cars have enabled them to be stolen at lightning speed via so-called ‘relay crime’; indeed videos exist of this actually occurring. Despite raised awareness and advances in security, identity theft continues to be a major problem. The Cifas Fraudscape survey showed a small 1% rise in 2017 over the previous year, but this is still a 125% increase compared to 10 years ago. Google has stressed its Street View does not encourage crime, but some critics have said it shows too much information and therefore could aid burglars in spotting properties that may be easier to break into. Meanwhile, social media use could also result in thieves gaining advantageous knowledge if users provide information about when they are away from their properties or businesses. There is currently much uncertainty around the UK’s future, but blaming Brexit, politicians or even parenting is not going to change the current reality. It seems that in order to combat the problem, one solution lies in educating businesses and individuals on how to do more to prevent theft themselves.

In case anyone needed more convincing, new research on the benefits of river water defences has been released by Flood Re at the “Building a resilient future for the UK’s Property insurance market” conference organised by the Association of British Insurers (ABI). Conducted by Risk Management Solutions (RMS) on behalf of the reinsurance scheme, the study quantified the financial contribution of the British network of river barriers and defences based on thousands of simulations of weather events. It found that on an annual basis damage worth £1.1 billion is being prevented across the UK, thanks to inland flood defences. The research commissioned by Flood Re also cited residential properties as benefiting from 42% of the average annual savings.

BMS has announced an agreement for a significant investment by affiliates of British Columbia Investment Management Corporation (“BCI”) and Preservation Capital Partners (“PCP”). The investment, which values BMS at £500m, is subject to regulatory approvals and is expected to close in the third quarter 2019. The BMS management team, led by Chief Executive Officer Nick Cook, will all remain in their current roles following completion and management and staff of BMS will remain significant shareholders in the company. Following the transaction’s completion, Pioneer Underwriters will be owned directly by the current shareholders of Minova Insurance, the holding company that had previously owned BMS.

Swinton Insurance has teamed up with the price comparison website, Quotezone.co.uk, to bring its Swinton Classic and Swinton Essentials Home insurance offerings to an even wider group of homeowners and tenants. This new partnership agreement between the two brands will offer Quotezone.co.uk’s millions of users an opportunity to explore the value of a Swinton Home insurance or Contents insurance policyholders.

Brokers have called for a reform of the Insurance Premium Tax (IPT), after HM Revenue & Customs launched a call for evidence on the operation of the tax last week. Mark Bower-Dyke, Chairman and Chief Executive Officer of Be Wiser, said that he would prefer it if IPT became VAT. He added: “At the moment it’s just on the cusp of being a completely neutral change that wouldn’t affect the HMRC, because of the increase they will get."

The Chartered Insurance Institute (CII) has launched Our History, a website dedicated to bringing to life the heritage of the organisation and the evolution of the insurance profession over the years. The Our History website - insurancehistory.cii.co.uk - covers the history of the institute’s Aldermanbury building, including a 360-degree virtual tour of the Insurance Hall and displays the unique stained-glass windows of the historic building. The CII’s collection of more than 1,500 Fire Marks, which were formerly on display in the staircase of the Aldermanbury building, can also be viewed on the site.

Marsh & McLennan Companies, Inc.'s (NYSE: MMC) Rising Professionals' Global Forum 2019 took place in London, with approximately 700 delegates attending the two-day event to hear from world class speakers on the central theme for the Forum - Adaption or Extinction. Marsh & McLennan has sponsored this event since 2013, which brings together current and future industry leaders. The Forum culminated with a Gala Night celebrating the insurance industry's extraordinary talent. This year's special guests were the Canadian astronaut Chris Hadfield and drum and base band Rudimental. All profits from the gala will be donated to Mind, a mental health charity.

Broker SEP Insurance Services has signed up with Applied Systems as its software house. The company’s ‘Applied Digital Broker’ software will be used to automate daily administration, host online services and distribute products. “New and established Brokers are realising that digital technology is the key to business success as it enables them to eliminate time spent on manual tasks and focus time on revenue-generating activities,” said Jeff Purdy, Senior Vice President of International Operations at Applied Systems.

Lloyd's of London insurance Broker Guy Carpenter has suspended a Senior Executive after he sent a sexually explicit email to colleagues on his birthday. In the email, Senior Vice-President James Conmy said: “There are doughnuts on Alf’s desk as it’s my birthday today. I hope people like Krispy Kremes – I know [female colleague] enjoys a glazed ring.” The female colleague, whose identity has not been revealed, replied in an email: “This is absolutely totally unacceptable James. There are limits to ‘jokes’ you can send at work copying in all colleagues – this is extremely rude and offensive. Please note that this will be forwarded to HR — HAPPY BIRTHDAY!” Mr Conmy and the colleague who leaked the email have both been suspended in light of the incident.

Things have become official for new representative body Insurtech UK, and one of its first achievements as an association is teaming up with the Department for International Trade (DIT). At Insurtech UK’s summer reception yesterday as part of London Tech Week, Minister for Investment Graham Stuart announced the collaboration which is aimed at promoting the interests of the UK insurtech community not only in Britain but also overseas. The alliance, which recently welcomed associate members Aviva and the Chartered Insurance Institute, said its partnership with the DIT involves several “exciting” workstreams.

Specialist brokerage Constructaquote.com has introduced a new insurance proposition for the cleaning industry, which the British Cleaning Council valued as being worth around £24 billion a year to the UK’s economy. Constructaquote.com said the launch comes amid a decline in the sector’s profitability since 2013. Citing information from MTW Research, the Moorhouse Group firm pointed to pricing pressure impacting cleaning companies at the smaller end of the market.

Tesla CEO Elon Musk told shareholders at the company’s annual meeting that an insurance product is still in the works and will be launched after the completion of an unspecified acquisition. Musk first revealed that the automaker was planning to enter the insurance business during a call with analysts following its first quarter earnings report in April. Originally scheduled to launch in May, Musk told investors that the product would leverage data from its Autopilot system to determine premium rates. According to Musk, Tesla was still waiting to close on an acquisition before launching the insurance product.

Bravo Group has had a very good year, if its 2018 results are anything to go by. The group, which comprises of Broker Network, Compass Networks and Ethos Broking, saw its revenues increase 130% to £53 million, up from £23.1 million in 2017. That jump is, in part, due to the number of acquisitions the group made in 2018, as well as new partners who came on board its networks. Bravo Group, under the Ethos Broking banner, acquired five regional Brokers in 2018 and six satellite brokerages, with a total GWP of £87.9 million. The group also had 56 new partners join, 29 with Broker Network and 27 with Compass Networks. Breaking down the figures for 2018, Broker Network had revenues of £15.7 million for the year, Compass Networks £4.4 million, and Ethos Broking £32.9 million. CEO of Bravo Group, Des O’Connor, said that he was extremely happy with the levels of growth that the organisation was experiencing.

The Insurance Fraud Bureau (IFB) has launched a counter fraud intelligence sharing platform, with eleven Insurers gaining access. The Insurance Fraud Intelligence Hub (IFiHUB) is powered by SAS and will see Insurers sharing intelligence in real-time to help catch out fraudsters. Ageas, Allianz, Axa, ERS, Markerstudy, Mulsanne Insurance, QBE, RSA, and 1st Central are amongst the first firms to start using the system.

InsurTech start-up Inzura has raised an additional £1m of investment in its latest funding round. The firm counts several big names among its investors. These include former LV and NIG Managing Director Phil Bunker, Autoline Founder Michael Blaney, MCE Chief Executive Julian Edwards, and former Highway Retail Managing Director Paul Cosh. Inzura is headquartered in the UK but also serves clients in Singapore, Thailand, and Indonesia.

Global mergers and acquisitions activity continues at a significant level, with representations and warranties insurance providing both buyers and sellers with a solution that reduces transaction risks and assists in facilitating clean exits from investments on both the buy and sell-side. Taxing Times for M&A Insurance, the fourth edition of AIG’s latest M&A Claims Intelligence Series, shows R&W insurance has the potential for both frequent and severe claims and responds to a wide range of deal issues. AIG has been assisting buyers and sellers with over 4,000 deals insured globally since the late 1990s. AIG’s M&A insurance team is made up of experienced professionals located in strategic offices throughout North America, Europe, and Asia Pacific.

BIBA recently collaborated with a number of government departments and industry experts – including NMU's very own Gary Barlow – to launch a new comprehensive guide on Terrorism insurance. This guide has been specifically tailored to support Brokers’ understanding of the risk, with the goal being to increase the take-up of this particular insurance class. "This new guide from BIBA and Pool Re will really help to raise the importance of Terrorism insurance particularly for small and medium enterprises" (RT HON Ben Wallace MP Minister of State for Security and Economic Crime). 

 

Market Movers and Shakers

iGO4 has appointed Simon Harrow to the newly created role of Chief Customer Officer as part of a wider restructure that brings all customer channels and touchpoints under one head. The move means that, Harrow, who was previously Head of Digital Strategy & Innovation with the company, now assumes responsibility for Operations, Quality, Business Excellence and Training, as well as his original brief of Marketing, Digital and the Online Customer Journey. Prior to joining iGO4, Harrow had led a number of award-winning businesses across multiple sectors including Retail, Software and Financial Services, including as COO of Kiddicare and a member of the senior leadership team at Wm Morrisons.

iprism, the technology-driven specialist wholesale underwriting agency, has announced the appointment of Manuela Roncalli as Finance Director, effective immediately. Roncalli brings more than 20 years of experience to iprism and will be responsible for its finance, risk & compliance and HR functions. She previously served as Commercial Finance Director and business partner at Mitie Group plc. Roncalli will support further development of the business by implementing frameworks that help facilitate growth, promote better use of data to drive decision making and ensure the business delivers against its strategic ambitions. Her joining completes the new management team following iprism’s transformational redevelopment in 2018.

Liberty Specialty Markets (LSM), part of Liberty Mutual Insurance Group, has appointed Steve McMurray as Chief Financial Officer (CFO). He takes on the new role with immediate effect. Commenting on the appointment, Matthew Moore, President and Managing Director of Liberty Specialty Markets said: “I am delighted that Steve is joining Liberty Specialty Markets. His experience will be used to drive our finance capability across the LSM group and he will make a significant contribution in ensuring LSM achieves its ambition to become a high-performing financial services organisation of the future.” Prior to joining LSM, Steve was CFO for BGC Partners Inc, a leading global brokerage business. He brings a wealth of experience from across multiple industries including insurance, having spent nine years at MS Amlin.

LexisNexis Risk Solutions, a leading data, analytics and technology provider to public and private sectors, including the insurance and auto manufacturing markets, has appointed Jeffrey Skelton as Managing Director, Insurance, UK and Ireland, effective July 1, 2019. Skelton will continue to solidify LexisNexis Risk Solutions as a trusted advisor and data analytics provider of choice for insurance providers. He will also be responsible for the investment and development of solutions that meet clients’ strategic objectives of transforming critical business processes using digital information, advanced analytics and machine learning to deliver higher levels of customer experience. The company’s ambitious growth track to provide the next generation of mobility and connected car services to insurance providers will accelerate with Jeffrey at the helm. Skelton has worked for LexisNexis Risk Solutions for over 17 years and brings decades of insurance and leadership experience to his new role. Prior to this appointment, Skelton served as Senior Vice President, Client Engagement, where he was an instrumental part of the leadership team and helped build the insurance portfolio, which currently serves nine countries and delivers more than a billion dollars in revenue. Skelton will continue reporting to Bill Madison, Chief Executive Officer, Insurance and will relocate with his family from the company’s USA headquarters in metro Atlanta to Nottingham.

Tokio Marine HCC has announced the appointment of Paul Knighton to join its Marine Liability division as Logistics Underwriter. Paul will report into Darren Carr, Head of Marine Liability and his role will largely be based around developing the Logistics and Freight Forwarders book of business. Paul’s hire further expands the team that began trading in January, offering specialist Marine insurance. The division’s products include: Marine Trades, Marine Property, Protection and Indemnity (P&I) Reinsurance and Marine and Energy Liability. Paul has been working in the London Market for eighteen years and has significant experience in both Broker and Underwriter roles across the Logistics, Cargo and Ports & Terminals classes. He joins from Skuld where he worked as Head of Marine Cargo & Property. Prior to this, Paul spent five years at TT Club.

American International Group, Inc. (NYSE: AIG) has announced that John Cusano has been appointed Chief Business & Technology Operations Officer, General Insurance, effective July 1, 2019. In this new leadership role, Mr. Cusano will be responsible for enhancing General Insurance’s business and technology operations infrastructure as well as aligning end-to-end processes with established target operating models. Mr. Cusano’s global portfolio includes General Insurance’s Shared Services, Information Technology, Project Management Office and Vendor Management operations. He will report to Peter Zaffino, President and CEO, AIG General Insurance and Global Chief Operating Officer, AIG and serve on the General Insurance Executive Leadership team, as well as the AIG Global Technology Council.

Zurich Insurance Group (Zurich) announces the appointment of Conny Kalcher to the position of Chief Customer Officer. She will lead the newly created Customer Office as part of Zurich’s drive to further elevate customer excellence across the organization. In this position, Conny will ensure the delivery of a unique and distinctive customer experience. She will start in her role on July 1, reporting directly to the Group CEO. Group Chief Executive Officer Mario Greco: “The digital era is driving significant change and a transformation of customer experience in the market place. This is a transformation that has already begun, delivering a number of company-wide initiatives to improve customer satisfaction and to drive profitable growth. We are delighted that Conny is joining us on our journey to accelerate the Group’s transformation and spearhead the digital customer experience, which will be reflected in Zurich’s brand refresh.”

Jensten Group has appointed former Broker Network Chief Executive Officer Andy Fairchild to the newly created role of Retail Managing Director. He will take up the post on 8 July and the business noted that his role will be to expand and deliver on the broader retail strategy for Jensten Group, looking at both organic growth and growth through acquisitions. Fairchild left Broker Network in December last year, after five years in the CEO role. Prior to that he worked as Managing Director of Broker Footman James and as Chief Operating Officer of Axa.

Saga has announced that Lance Batchelor, Group Chief Executive Officer, will retire from the business in January 2020, after six years with the company. The provider stated that it has started the process to recruit his successor. Saga Chairman Patrick O’Sullivan commented: “Lance has led Saga with a resolute focus on reinvestment and rebuilding a truly customer centric organisation."

Konsileo Chief Executive and Co-Founder John Warburton has confirmed that four people have been let go from the Broker. The four Brokers were part of the start-up’s team of Client Directors, which now has 14 members. Warburton said: “It’s the normal process of working through people’s plans and some of them couldn’t be fulfilled."

AXIS Re, the reinsurance business segment of AXIS Capital Holdings Limited, has announced the appointment of Joe Sweeting as Head of Lloyd’s Casualty Reinsurance. In his new role, Sweeting will manage all aspects of AXIS Re’s casualty business at Lloyd’s, including portfolio strategy, new and renewal production activity and distribution from reinsurance intermediaries. Prior to joining AXIS, Sweeting served as a Casualty Treaty Class Underwriter at Vibe Syndicate 5678. He has also served as Head of Casualty Reinsurance for Hiscox Syndicate 33 and a Casualty Underwriter for Amlin Syndicate 2001.

AXA UK has announced that Laurent Matras will take charge of the AXA Retail business in the role of Executive Managing Director on a permanent basis, with effect from 1st June 2019 subject to regulatory approval. Matras, previously Managing Director for Personal Intermediary and Corporate Partners (PICP), had been acting up in the role since 1st March. He will continue to form part of the AXA Insurance leadership team, representing the AXA Retail business on AXA UK’s Management Committee. Matras has been with AXA Insurance for thirteen years in total and before leading PICP he held various roles in the company including Head of Actuarial, Head of Personal Lines Underwriting, and three years as Finance Director. In between, he took a role as Managing Director at Groupama Insurances.

Specialist insurance and financial services company Ecclesiastical has officially appointed Denise Cockrem as its Group Chief Financial Officer. Subject to regulatory approval, Denise will join Ecclesiastical’s Board as an Executive Director from 1st July, having led the Finance, Actuarial, Risk and Internal Audit functions since last year. Denise joins from the renewable energy company Good Energy Group plc, where she held the position of Chief Financial Officer. She brings a wealth of relevant experience having held various positions at Ernst & Young, Barclays, RBS, Direct Line and RSA.

 

 

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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