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General Insurance Newsletter - Friday 16th February 2018

16 Feb 2018

Market News

AIG has revealed a loss of $6.7bn (£4.8bn) for the last three months of 2017 citing charges due to tax reform in the US and the cost of catastrophes. The general insurance combined operating ratio (COR) for the period was 113.3% with net written premiums of $5.9bn. For the full year the COR of 117.3% was an improvement on the 118.9% posted in 2016.  Net written premiums however dipped to $25.4bn from $29.6bn the year before. The US provider restructured into three core divisions in September 2017 - general insurance; life and retirement; other operations) under the leadership of new CEO Brian Duperreault who had been appointed in May.

It has been revealed that former Axa Head of Global SME initiatives Matthew Reed has launched a start-up MGA. Equipsme will start selling its healthcare product for SMEs through general insurance Brokers on 1 March this year. The product is underwritten by Axa PPP and the Insurer has also provided the financial backing for the new venture. Reed left Axa in January 2016. He joined the Insurer as Managing Director of intermediary and direct in April 2011 and moved to a global role in 2014.

BIBA has reiterated its call for a separate Financial Services Compensation Scheme (FSCS) pot for Brokers. The Financial Conduct Authority (FCA) closed its latest consultation into the FSCS fees paid for by financial firms last week. The regulator made a number of proposals following the initial consultation process, which was opened in December 2016. In January this year the FSCS predicted it will charge Brokers £23m for 2018/19 a 28% increase on the £18m fee in 2017/18. IT was reported that David Sparkes, BIBA Head of Compliance and Training, said the trade body had submitted a response to the latest consultation, adding that this part of the proposals looked at aligning the financial year and the FSCS levy year.

Liberty Specialist Markets is set to launch Toredo, an e-trade platform designed to offer Brokers access to Trade Credit insurance. According to Liberty the platform, which will focus on cover for banks, corporates and commodity traders, will allow Underwriters, Brokers and clients to buy and sell insurance capacity with greater speed, visibility and efficiency. Beyond operating the platform, Liberty will provide capacity to Toredo. Other capacity will come from a soon-to-be announced consortium.

According to reports, a policy paper put forward by the giant UK Insurer, Royal London suggests that those approaching the age of retirement could make payments, tax-free of course, into a so-called “care pension.” For its part, the Insurer would then pay the policyholder a set amount into the special care account should the individual go on to develop care needs. It suggests that premiums in the region of £100-£150 a month would be enough for Insurer to offer the product.

The cost of dog attacks on farm livestock has risen to record levels, according to rural Insurers – prompting the launch of a campaign urging owners to keep their pets on a lead in the countryside. Incidents of “livestock worrying” reported to NFU Mutual rose by 67% across the UK in the past two years, with the total cost to the farming industry in 2017 estimated at £1.6m. In the East of England, the cost of claims has leapt from £4,000 in 2015 to £11,000 in 2017. The Insurer also surveyed more than 1,000 pet owners earlier this year, with the results revealing that 60% let their pets roam off the lead in the countryside and 7% admitted their pets had chased livestock in the past. With many families expected to visit the countryside during half-term and the Easter holidays, the Insurer has appealed to dog owners to keep their pets on a lead at all times and for people to report out-of-control dogs to local farmers or the police.

Thomas Miller Specialty has concluded its acquisition of the fixed-premium Protection and Indemnity (P&I) business of Navigators Management (UK) Limited. Thomas Miller Specialty Chief Executive Officer, Guy Pierpoint previously described the move to snap up the London-based business as “a logical and progressive step” for the commercial managing general agent (MGA). Among the goals was to create scale amid a competitive market. Navigators’ international insurance Chief Underwriting Officer Colin Sprott, meanwhile, called the acquirer “an excellent choice” to support the process of consolidation in the P&I market. Meanwhile Navigators will continue to provide underwriting capacity to Thomas Miller Specialty. The MGA offers global insurance and related risk management services in sectors including Marine, Aerospace, Cyber and Kidnap & Ransom. Its specialty risks are managed by  Insurer Thomas Miller on behalf of Lloyd’s of London and select company markets.  

A personal lines cyber protection product is now available for Brokers to offer their customers in the UK. According to provider iSmartSupport, Brokers are able to whitelabel the offering which includes cyber protection software and a cyber advice service to customers. The Tech-Friend service can be accessed online and by phone and can resolve all manner of technical issues, whether software or hardware related. The proposition also includes assistance in the event of a data breach to analyse what went wrong and recover lost data.

Temporary insurance provider has developed a scheme which offers short-term Home insurance. According to the Broker the policy is customisable to suit the needs of individual homeowners. The minimum term is one week and the maximum term is 28 days. There are also different levels of cover to choose from. Tempcover advised that quotes could be sourced online and at any time in just a few minutes. Policy documents are then emailed and customers have the choice as to whether cover begins immediately or in a month’s time.

Nexus Group has bought Lloyd’s coverholder Apsley Specialty for an undisclosed sum. The managing general agent (MGA) stated that Apsley - which is also an MGA -  was established in 2012 and specialises in Directors and Officers and Financial Institutions (DOFI). The purchase will build on Nexus’ existing DOFI capability and the firm stated it was looking to grow its combined DOFI offering to £35m of GWP by 2020. As part of the purchase Apsley Chief Executive officer James Lawrie will join the Nexus board.

Pool Re is exploring ways of helping its policyholders mitigate risks before they have occurred, according to Julian Enoizi, the Chief Executive of the government-backed terrorism reinsurance pool. In a recent interview, Mr Enoizi said that Pool Re wants to take a more collaborative approach to terrorism risk management, especially working with the larger organisations in the scheme.

Allianz Global Corporate & Specialty SE (AGCS), has partnered with InsurTech start-up Flock to develop digital insurance solutions for the growing drone or ‘Unmanned Aircraft Systems’ (UAS) market. The partnership’s first product has launched, an app (for Android and iOS devices) that lets operators purchase ‘pay-as-you-fly’ drone insurance at the touch of a button.

Allianz has increased its shareholding in Trade Credit Insurer Euler Hermes to 92.43%. In November last year Allianz began to position itself for a full Euler Hermes buyout with the acquisition of 11.34% of shares taking its stake to 74.34%. Allianz has increased its stake in Euler Hermes share capital by 29.43% since November, representing a total investment of approximately €1.5bn (£1.34bn).

In Aon’s 2017 Global Risk Management survey only four of the Top 10 business risks were insurable. It suggested just because they don’t have a wording to suit or an appetite to underwrite the unquantifiable does not negate the changing nature of the risks that customers face or the need to mitigate them. What it does do however is place the onus firmly on the insurance sector to come up with solutions. Last year, QBE announced QBE Ventures, a US$50m investment fund for partnerships with Insurtechs and a recent investment and partnership was with Cytora, whose Risk Engine, driven by machine learning algorithms, combines an Insurer’s internal data on a specific cover with external information from a broad spectrum of sources to provide enhanced insight into expected claims activity at a whole portfolio and also at an individual risk level.

A report by cybersecurity firm Norton, revealed in 2017 alone 17 million Britons were targeted by phishing, ransomware, online fraud and hacking, with hackers stealing £4.6 billion from British internet users. The data poses the question ‘are individuals sufficiently insured against this type of threat?’ Geo Private Clients, part of managing general agent Geo Underwriting, has launched a new High-Net-Worth Household insurance proposition to address just that; including cyber risk assessment as standard with support from DAS UK Group, the UK’s leading Legal Expenses Insurer. The new product, which is available through a select group of Brokers, provides clients with all the cover you would expect from a leading High-Net-Worth Household policy with the addition of a Cyber insurance package as standard. This covers clients for cyber-crimes, ransoms, hacks and viruses ensuring the whole family are protected for both physical and virtual threats alike.

The BBC spent £466,000 on Terrorism insurance in its 2017 policy year, according to a Freedom of Information (FOI) request. This is a small increase from the £453,000 it spent in its 2016 policy year, which it detailed was between 31 March 2016 and 30 March 2017. The BBC further stated that it purchased its cover through the government backed Pool Re scheme.

The UK government paving the way for the arrival of autonomous vehicles by 2021. But while manufacturers work on advancing the technology, the insurance industry has been left wondering what the future of auto insurance will be – and how the claims landscape will change. It is currently expected that when autonomous vehicles do become widely used, the long-term effect will be fewer crashes, but potentially at a higher cost. “Our own data shows increasing severity and reducing frequency,” Ian Kemp, Commercial Motor Underwriting Director at RSA, said at the Insuring Autonomous Vehicles 2018 conference. The new technology, once fully embedded, will “massively reduce” the frequency of claims – potentially by up to 90%, Kemp said. But while safer roads are expected long-term, there have been concerns voiced over what could be a “messy” interim period. Fully autonomous vehicles are still a way off from being the reality and as semi-autonomous features are gradually introduced to cars, there is a danger that the public will put too much trust in their vehicles.

The London Market’s approach to data and information sharing means that there is “huge potential for error,” according to Nick Mair, CEO of data monitoring firm, Atticus DQPro that works with a number of major Insurers. Lloyd’s last week revealed plans to mandate for the use of the electronic placing platform PPL, with its CEO Inga Beale stating that take-up was “not happening fast enough.” The push for modernisation in the market is vital, according to the CEO, who likened insurance’s legacy system foundation to the London road network.

Pool Re has rolled out a new tool designed to incentivise medium and large businesses for adopting effective risk mitigation measures. A 5% premium discount awaits insureds who get onboard. Co-developed with ARL Partners, the Vulnerability Self-Assessment Tool (VSAT) has been accredited by police security approval kitemark “Secure by Design”. VSAT builds on Pool Re’s work and collaboration with the National Counter Terrorism Security Office’s Crowded Places programme, which also offers discounts.  Available to all Pool Re member Insurers and for risks falling due on or after April 1st, the new resource is part of a series of incentive initiatives by the UK Terrorism Reinsurer.

Insurance law firm BLM has partnered with the London School of Economics and Political Science (LSE) to further advance its analytics capability and potentially tap into new markets through additional services. A team of three LSE professors will be working with BLM to develop prediction models for litigation risk. Leading the academic side of the partnership is Professor Henry Wynn, Chair of the Centre for the Analysis of Time Series and Head of the Decision Support and Risk Group. He is joined by LSE Statistics department head Professor Pauline Barrieu and machine learning expert Professor Milan Vojnovic – who also serve as Institute of Actuaries principal examiner and Data Science chair, respectively. 

In its latest report, IBM has found that insurance companies that either invest in or work alongside insurtechs tend to perform better than insurers that do not. The report, “Friend or foe?: Insurtechs and the global insurance industry,” surveyed C-suite executives from traditional insurers, insurtech leaders and venture capitalists to outline the causes and consequences of working with industry-disruptive upstarts. In general, the survey found that the insurance industry is well-aware of the potential of insurtechs and the innovations they bring to the table; reception for the tech-driven start-ups and the change they bring has been largely positive.

Market Movers and Shakers

Former Ryan Specialty Group (RSG) Managing Director Jerry Tegan has come out of retirement to become the Executive Chairman of Ethos Specialty Insurance Services.

Thomas Carroll has opened its sixth office in Newport, South Wales.  The Broker has appointed Tim Putin, previously at Bluefin and Murray James, a local Broker, to the office. It has also transferred Vanessa Williams andBrian Watson from their offices in Caerphilly and Swansea.
Marshall Bailey is set to take on the position of chair of the Financial Services Compensation Scheme (FSCS) from 1 April 2018. He was appointed by the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) and will take over from Lawrence Churchill who is stepping down after two terms.

JLT Specialty (JLT) has appointed Matthew Hughes as Partner in its Financial Institutions (FI) team.

John Chambers, formerly AEGIS London’s Director of Underwriting, is to take on the newly-created role of Director of Innovation and Corporate Development.

Expansion continues at independent Lloyd’s Broker AFL Insurance Brokers Ltd (AFL) with the appointment of experienced (re)insurance professionals Barry Rowland andChris Cavani. Rowland joins AFL as Director, Property & Casualty, whilst, Cavani joins as Director in AFL’s expanding Property Practice.

QuestGates has announced the launch of a new service handling agricultural claims following the appointment of Frank McGaffney to its growing team.

Construction insurance specialist, CRL, is taking steps to bolster its Board of Directors with the appointment of independent Non-Executive Director, Richard Tamayo, who joins the board with immediate effect.

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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