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General Insurance Newsletter - Friday 16th March 2018

16 Mar 2018

Market News

The Financial Conduct Authority (FCA) needs to decide when the Senior Managers and Certification Regime will come in for Brokers as soon as possible, according to David Sparkes, Head of Compliance and Training at the British Insurance Brokers’ Association (BIBA). According to Sparkes “Once we know the date the larger Brokers will have the ability to start working backwards from that to prepare their submissions for the FCA so that they are ready in time”. The Senior Managers and Certification Regime (SMCR) aims to make individuals more accountable for their conduct and competence and comes into force for insurers on 10 December this year. In July last year the regulator proposed to extend the regime to almost all regulated firms, including insurance Brokers. For Brokers there is no set date for then the new rules come in, however Sparkes stated it will be in the second half of 2019. 

Cheltenham-headquartered Broker Bellwood Prestbury has achieved Lloyd’s Broker status building on its coverholder status which it has held since 2010. The company, which also has an office in London, has been providing high-risk insurance for companies and organisations for over 17 years. Its client base includes multinationals with complex operations in multiple jurisdictions, NGOs working in war or disaster regions and smaller companies who bid for specific contracts in high-risk countries.

The private equity-backed buyout of Canopius has now completed returning the Top 10 Lloyd’s Insurer to a standalone business. The $952m (£737m) deal between Sompo Holdings and a consortium led by Centerbridge Partners was first announced in September 2017. The Japanese firm had bought Canopius in 2014 for £594m. Canopius will be led by Chairman Michael Watson and group Chief Underwriting Officer Mike Duffy. Since being founded in 2003 Canopius has grown to write over $1.5bn of premium last year.

Open GI has revealed its latest software solution Mobius. The technology specialists described the new platform as “the most modern and multifaceted approach to insurance software”. According to the software house Mobius has been built on the latest technology and works for Brokers, MGAs and Insurers. The firm added that it can be used for personal and commercial lines business across standard and niche sectors in digital or traditional channels.

Pre-tax profit at personal lines Broker Grove & Dean grew by a third to £846,453 in 2017. The Romford-based firm, which has specialisms in niche and non-standard markets as well as Motor Sport offering, reported that in the year to 31 May Ebitda “commensurately increased” to £1.08m (2016: £887,861). A filing at Companies House also revealed that the Motor Broker achieved a 5.3% rise in turnover to £12.3m (2016: £11.7m). The average number of employees at the business was stable for the period at 138.

Saffron Insurance has bought Hertford-based Continuum Insurance Brokers for an undisclosed amount. It is the second deal in a matter of days for Broker Network-backed Saffron having purchased Grove Insurance last week. Saffron was snapped up this January by Broker Network as the network’s fourth “regional powerhouse”. Continuum, also a Broker Network member, was established in 1966. All 15 employees at the commercial broker including the three Directors Bernard Murphy, Neil Brady and Clive Mann will stay with the firm working from their current office.

Leeds-based commercial insurance Broker Gauntlet has revealed that it is pumping resources into its personal lines division thanks to a “growing demand” for personal and private cover from high net worth clients – a success story that bucks the trend for Brokers being squeezed out of personal lines.

Willis Towers Watson has announced the development of a global insurance facility aimed at building the resilience of ecosystems and the communities they support. The Global Ecosystem Resilience Facility (GERF) was launched Friday at the Economist’s World Ocean Summit in Mexico by Willis Towers Watson CEO John Haley. With marine ecosystems at risk, the economies in coastal communities in developing and emerging countries are harmed by damage to natural capital like coral, mangroves and fisheries. Global climate change also threatens the lives and livelihoods of residents of those communities as storms grow more intense and sea levels rise. According to Willis Towers Watson, the GERF will respond to these risks by delivering powerful analytics, incentivising environmental stewardship and providing insurance protection. The initial work of the GERF will focus on the protection of ecosystems like coral reefs, mangroves and seagrasses in the Caribbean. Willis Towers Watson has also partnered with Cefas and the University of York to map marine ecosystems, assess risk exposure and develop risk and value models for coral reefs in Grenada and the wider Caribbean. That will allow insurance programs to be structured to encourage risk understanding, assessment, and coordination and pre-planning to allow swift post-disaster recovery.

With the future of insurance contracts still in a grey area, those likely to be affected by the UK’s departure from the European Union are being left with no other recourse but to prepare for the worst. Neighbouring Ireland, is making sure robust measures exist. “There is a risk that, in a hard Brexit with no transition arrangement, certain activities done through passporting, on a freedom of services or freedom of establishment basis, will no longer be able to be executed,” Central Bank of Ireland Deputy Governor Ed Sibley said in a recent interview. “An obvious example is a UK insurance firm that writes an insurance policy in Ireland after April 01, 2018. There is a potential for that policy to be impacted by Brexit after March 30, 2019.” It’s a fear that’s been expressed a number of times before – the prospect of insurance policies being rendered invalid unless a deal is reached or an EU subsidiary is set up for each UK Insurer wishing to retain passporting rights. For Ireland, it is gearing itself up in case its – and pretty much everyone else’s – hope for a positive scenario is crushed. 

While the global insurance sector saw an uptick in M&As in the second half of 2017, breaking a two-year lull, the picture in Europe was markedly different – suggesting that Brexit is continuing to act as a brake to business. The volume of insurance M&A deals in Europe fell 22% to 118 in 2017, down from 151 the previous year, a report from law firm Clyde & Co reveals. By contrast, globally the second half of the year saw the first rise in M&A transaction numbers since 2015. The European slowdown can be attributed to Brexit, says the firm. Insurance businesses within Europe have had their time and attention taken up by preparing for the UK’s departure, with many setting up new subsidiaries to navigate passporting rights. Those outside the region are likely to have held off on new deals due to the uncertainty surrounding the outcome of any deal made.

In the Global Risks Report published by the World Economic Forum in collaboration with leading global institutions including Zurich Insurance Group, points to several areas of significant concern in the areas of environmental, technological, geopolitical, societal and economic risks dimensions. First, we are pushing our degraded planet to the brink; second, our defenses against catastrophic cyber risks are being seriously tested; third, our growing vulnerability to systemic risks is confirmed with signs of strain in many of the systems on which we rely; fourth, growth alone will not repair the social fabric; and lastly, the risks of international conflicts are increasing.

QBE’s award-winning Rehabilitation team has launched a new interactive brain injury tool Brain Matters, it is designed to advise and inform insurance professionals, customers and the public on the most common physical and psychological brain injuries seen in the claims environment. Brain Matters highlights the top 10 injuries to the brain that can be seen in Employer’s Liability, Motor and Public Liability claims and includes success stories where rehabilitation provided by QBE Rehabilitation team has improved both injury and claims outcomes.

DCL are incredibly proud to have won the prestigious Insurer of the Year award at the 2018 CIR Commercial Insurance awards. The awards were held on 8th March at the Millennium Mayfair Hotel in London. In a tough category, DCL won out over well-established multinationals including RSA & Markel International. The judges cited innovation and growth in a competitive market as some of the reasons for their decision.

Sutton Winson has been accredited with the 'Investors in People' gold standard. Commenting on their proud achievement, David Thomson, Managing Director said: “After being accredited with the insurance industry’s gold standard of ‘Chartered Insurance Broker’ in December 2017, we are immensely proud to now be accredited with another one of the most important accolades in business. The assessment was in-depth, independent, and demonstrated that the critical attributes of Trust; Transparency; Empowerment; Sustainable Success; Living the companies Values; Ability to Adapt and Rewarding high performance were truly embedded in our culture. I have not just the management team to thank, but each and every individual who makes our company successful and a great place to work.”

Beach & Associates has formed a speciality and wholesale platform to be led by former Integro Insurance Brokers head honchos John Sutton and Toby Humphreys. The two, who left the Lloyd’s Broker a year ago, will be joining Beach on March 19. Along with Simon Haggas, Sutton and Humphreys were founders and directors of Humphreys Haggas Sutton and Company Ltd (HHS), which was rebranded into Integro Insurance Brokers after being acquired by Integro Ltd in 2005.   

Old Mutual, the international savings and insurance banking group which originated in South Africa and which had previously announced plans for a break-up, has issued a statement regarding a legal claim in the US that reportedly involves the Travelers Companies, the US insurance giant, and St. Paul Fire and Marine Insurance Company. According to the statement, the claim has been lodged with the United States District Court for the Southern District of New York. Old Mutual outlined that the claim involved “pre-existing head office legacy items relating to previously disposed of US assets,” but did not elaborate any further.

Consumers’ preference for using the internet to research and purchase insurance means that brokers need to make digital tools a key part of their arsenal, a new report says. Almost half (48%) of consumers named online as their preferred way to compare insurance carriers and plans, the latest research from Fuel Cycle reveals, and today chatbots and price comparison tools make it easier than ever before. Across Motor, Property, Health and Life insurance, respondents said they spent an average of 0-3 hours researching providers and considered 0-4 different providers before finally landing on one. As a result, both Insurer and Broker must understand that the consumer’s shopping process today is quick and should make sure they are “at the frontlines” of web searches.

NMU is to close its Letchworth office as it looks to merge three offices into one region as part of a restructure of its Southern operations. The changes will take place over a six month period, during which time the Munich Re service company will look to reposition staff affected by the changes into alternative roles or locations within the company. The changes will take place over a six month period, during which time the Munich Re service company will look to reposition staff affected by the changes into alternative roles or locations within the company. Commenting on the changes, NMU CEO David Perfect, said: “NMU’s long term success has been founded on the multi award-winning service provided to our Brokers, of which we are very proud and the forthcoming changes will not affect the quality of this service.

More than three million UK households will be priced out of car ownership if annual premiums keep rising at the current rate, according to research from pay-as-you-go Insurer Cuvva. In the last two years, the average cost of an annual comprehensive policy has climbed a staggering 23% to £827 – and industry experts believe it’s on course to reach a record high in 2018. According to Cuvva’s research, one in six (16%) drivers say they won’t be able to afford the running costs of a car if premiums keep rising at this pace. With 79% per cent of UK households owning at least one car, this amounts to more than 3.4 million households facing a driving affordability crisis if insurance prices continue to soar. Many drivers are already struggling to afford costs, with recent data indicating that millions are taking out loans to cover car expenses.

BMS Group Limited the independent specialist insurance and reinsurance Broker, has announced the launch of BMS Innovation Labs, a platform to drive change and innovation within the company and the wider insurance industry. BMS Innovation Labs will focus on how to deliver the best possible outcomes for clients using all available tools, including new technology and business approaches that can add value to and enhance BMS’s offering. BMS Innovation Labs will be employee-led, providing a forum for individuals from across the business to contribute to the development of innovative and disruptive approaches and technologies.

UK General has launched personal Cyber protection insurance. The Leeds-based specialist and niche personal lines provider described the launch as “one of the first in the market to be offered to ordinary members of the public” adding that previous cyber offerings have “focused on corporations and mid to high net worth policyholders”. The product has been developed with capacity partner Munich Re and will be distributed via Brokers as an add-on or stand alone.

Aviva is targeting growth in SME business this year after it posted rising profits and a combined operating ratio (COR) of 93.9% for 2017. According to Phil Bayles, Managing Director of UK Intermediaries, Aviva has made a “deliberate effort” to focus more on businesses with a turnover of under £100m.

Miles Smith Holdings has reported an 11% rise in turnover to £23.02m for the year ended 31 August 2017. The group also achieved a 52% increase in profit after tax to £1.35m from £887,919 in 2016. The figures, released in a filing at Companies House, showed that operating profit rose to £1.96m for the period.

Aston Lark has bought Stourbridge-based Ingram Hawkins and Nock (IHN). Established in 1974, IHN has over 2,500 clients and commission and fee revenues of around £1.6m of which 90% is commercial lines. According to Peter Blanc, Group Chief Executive Officer of Aston Lark, the whole IHN team will move across to Aston Lark.

Markel International has ceased writing London open market Property business with immediate effect. The move will lead to a total of three redundancies and a spokesman for the Insurer confirmed that discussions were now being held to find places within Markel for the other people on the team. The same spokesman declined to comment on the volume of the impacted business.

Motorcycle specialist MCE Insurance has criticised the UK government for failing to deliver a firm position on a transitional arrangement ahead of Brexit as it pulled out of trading in the Republic of Ireland. MCE cited ongoing uncertainty during the Brexit negotiations and its current expectation that Insurers will no longer be granted Freedom of Services provided by flexible passporting arrangements, as being the main drivers for a decision it described as a “devastating blow for Irish bikers”. The firm, which acted as a Broker and Insurer in the country, said that it will stop trading as of 30 March but would continue to administer policies and claims until 29 March 2019. It added that it was working on a solution for claims beyond March 2019.

MGAM, the underwriting agency set up by Jason Anthony, has developed an event product which is available for Brokers to white-label. The product, MGAM Events, is designed as a solution for MGAM coverholders and Brokers to write all the cover that is normally required by event insurance, including Employers’ Liability, Public Liability, Event Equipment, Abandonment, Cancellation or postponement available as standard. Extensions, such as cover for overseas work and damage to venue, can also be added.



Market Movers and Shakers

Netherlands-based Insurer NN Group has announced the departure of CEO of international insurance and management board member Robin Spencer, effective June 01, 2018.

The MIB has announced that Dominic Clayden will join the company as Chief Executive and the Board as an Executive Director on 14th May 2018, succeeding Ashton West OBE. After 15 years at MIB, Ashton will be retiring as Chief Executive and Executive Director, and over the coming months Ashton will work with Dominic to support an orderly transition. 

ARAG’s Head of Sales Andy Talbot will now be doing double duty at the Legal Expenses and Assistance provider as he takes charge of both the After-The-Event (ATE) and Before-The-Event (BTE) sales teams.

Pen Underwriting has announced two senior appointments to its business development team, to further strengthen its regional and specialist support of UK Brokers. Andy Dodd joins as Schemes and Delegated Authority Business Development Manager, while Duncan Green has been appointed Senior Business Development Manager or the South West region. Both are newly created roles.

Gauntlet has appointed Darryll Leach, to lead the dedicated personal lines division within it’s head office team, which numbers 52 employees.

SchemeServe, a leading cloud based provider of insurance software for intermediaries, has announced the appointment of Andrea Sadler as Head of Sales. 

Saga Services has announced the appointment of Alex Crossto the role of Product and Propositions Director of its insurance division. In further news, Saga has also appointed Liz Latter as Commercial Director.

Direct Insurance Group Plc (‘DIG’ or ‘the Group’) one of the UK’s leading independent Lloyd’s Brokers announces the appointment of David Flint, as Chief Commercial Officer, a newly created role, placing him at the helm of its wholesale division, Direct Insurance London Market. 

Barbican Insurance Group has announced the appointment of Sarah McGurk as Class Underwriter for Directors’ & Officers’ Liability insurance. 

Ed, the global reinsurance, wholesale and specialty Broker, has announced the appointment of Duncan Childsas Wordings Advisory Manager for the Professional & Executive Risk team.

Independent Lloyd’s Broker AFL Insurance Brokers Ltd (AFL) has announced the launch of a commercial Marine division, and the appointment of Alex Mott as Director of Marine.

Covéa Insurance is pleased to announce it has appointed Kim Sharpe to the role of Key Account Manager to oversee the company’s expanding pet insurance offering.

ArgoGlobal, the Lloyd’s Insurer and member of Argo Group, has announced the appointments of Geoffrey Bull, as Casualty Treaty Underwriter, and Jaime Garcia-Anton Lopez, as Professional Indemnity (PI) Underwriter.

NWBIB, part of the One Broker group based in Cambridge, has promoted two memebers of staff: Suzi Bennett will take on the position of Account Executive reflecting her ability to provide an excellent service to her clients, while Will Heading will become a Broking Executive rewarding his commitment to both the business and his growing book of clients.

Mark Collins has been announced as the new Chief Information Officer for Ageas UK.

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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