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General Insurance Newsletter Friday 17th July 2020

17 Jul 2020

Jensten Group has bought 100% of the share capital of HTC Associates for an undisclosed sum. The deal, which follows Jensten’s purchase of Senior Wright earlier this month, has received regulatory approval and is expected to complete at the end of July 2020. Derbyshire-based HTC was established in 2004 and specialises in Professional Indemnity insurance. It brings around £5m in gross written premium (GWP) to the Jensten portfolio.

Insurtech Brolly is being acquired by Direct Line Group to help modernise its processes. When the deal goes through, Brolly will no longer offer its products and services and will instead be integrated “with the insurance prowess of Direct Line Group” to help “accelerate the next generation of insurance products.”

The Ardonagh Group has completed its £2bn debt raise along with the purchases of Broker Network-owner Bravo Group and Irish Broker Arachas for a combined value of over £550m. The business stated that it has raised £1.575bn through a unitranche facility and £400m through senior PIK [payment-in-kind] toggle notes. It also confirmed that it now has access to a £300m war chest to fund future growth plans.

The Danish Financial Services Authority (DFSA) has confirmed that Gefion Insurance formally entered into liquidation on 13 July. Søren Aamann Jensen, partner at law firm Kromann Reumert, and Troels Askerud from Gefion have been appointed as joint liquidators. It was reported at the end of June that Gefion would enter into solvent liquidation after the DFSA withdrew its license as an insurance company.

Technology provider, CDL, has added Percayso Inform to its systems. According to the tech Provider the move will give Broker customers access to insurance intelligence, enhanced risk analysis and more competitive pricing. CDL detailed that the partnership will give Insurers, Brokers and MGAs access to Percayso Inform’s data hub, enabling quotes to be enriched with public, private and consented data, including a full complement of credit bureau information.

PIB Group has bought insurance website UKinsuranceNET for an undisclosed sum. This is the consolidator’s 30th deal and follows its purchase of Marx Re-Insurance Brokers in Germany last month. UKinsuranceNET, which is the trading name for Internet Insurance Services UK, was established in 2001 and is based in Stockton on Tees.

This year, Flood Re processed more claims and paid out more than in the first three years of operation combined. In 2019/20, Flood Re incurred claims at a gross cost of £160m – ten times higher than the previous year. After three relatively dry years, 2019/20 saw the first major Storms, Ciara and Dennis, causing widespread flooding across the UK. Between November 2019 and February 2020, thousands of homes were flooded in South Wales, Northern and Central England and the Scottish Borders.

Action by the members of BIBA (the British Insurance Brokers’ Association) and the ABI (Association of British Insurers) is benefiting long-standing customers, reveals a report published by BIBA. The two organisations launched a set of Guiding Principles and Action Points (GPAPs) to address the occurrence of excessive differences between new customer premiums and subsequent renewal premiums that unfairly penalise long-standing customers in Motor and Home insurance, and committed to reporting back on their effectiveness. According to their survey, 93% of respondents reported a Motor re-broking system in place and 89% of respondents reported a Home insurance broking system in pace and awareness of GPAPs is high at around 89%.

Covéa Insurance has been named one of the best places to work in Digital in the large organisations category of the 2020 Computing Digital Technology Leaders Award. The scheme recognises businesses nationwide that successfully attract, train and retain the brightest and best digital talent. The achievement represents a major milestone in Covéa Insurance’s digital transformation, a strategic programme which the company embarked upon eighteen months ago in a bid to transform its offering to meet the needs of future customers.

Balcony barbecues seems harmless enough... However, according to Zurich Insurance just four balcony blazes costed a whopping £9 million in damage last year. The Insurer has warned that the majority of balcony fires are caused by barbecues and discarded smoking materials with fires quickly spreading to neighboring flats and sometimes entire buildings. Indeed with nine million families across the UK now living in flats, and London alone reporting 550 balcony fires in the last three years, the company is now stating that “barbecues should never be used on balconies under any circumstances.”

In further news....  Zurich Insurance Group shareholders get nearly £17 per share in dividends and no short-term changes will likely be made, according to board Chair Michel Liès. In an interview with Swiss publication Finanz und Wirtschaft, Liès was quoted by Reuters as stating: “The board of directors had proposed a dividend for 2019 of 20 Swiss francs, a level that we can sustainably pay. The high dividend is an obligation to our shareholders. We have no intention of changing anything in the short term. With Property and Life insurance and service fees, our business model is extremely stable.”

Arch Capital Group is expecting somewhere between US$205 million (around £162.6 million) and US$225 million (around £178.5 million) in pre-tax catastrophe losses across its Property Casualty insurance and reinsurance segments for the second quarter. The approximation is net of reinsurance recoveries and reinstatement premiums, and spans a range of estimates for exposure to COVID-19 global pandemic claims as well as for losses related to civil unrest claims in the US and other catastrophic events in the period.

The delayed sale of the Bank of Ireland building to Elkstone Capital Partners has prompted Aviva Life & Pensions Ireland to take legal action. According to The Irish Times, the fast-tract commercial court case revolves around the Aviva unit’s claim that Elkstone had failed to pay the full transaction amount of €5.5 million (nearly £5 million) by the March 11 deadline set out in their agreement. It was reported that only the €277,500 (around £251,700) deposit had been paid, with the buyer blaming the coronavirus crisis for its failure to finalise the deal on time. In response to Aviva’s move, Elkstone is now offering to pay the balance and get the purchase to cross the finish line on July 24. 

A Managing General Agent and a Specialty Insurer are furthering a partnership to boost the construction insurance space. Pen Underwriting will be providing support to CNA Hardy for its Construction offering after a multi-year renewal of an existing capacity deal. The agreement sees CNA provide 100% capacity for up to £50 million in premiums for Pen’s Construction business. The deal runs until 2024 and is an exclusive partnership.

The British Insurance Brokers’ Association (BIBA) is hoping its members will be able to grab an increased share of the young driver insurance market after renewing a deal with specialist Marmalade. The Young Driver Telematics scheme was originally launched in 2017 and gives access to telematics and car-sharing schemes that are aimed at the 17- to 34-year-old market. Its renewal comes as the market continues to expand – research shows that there were close to one million live policies in 2018, up from just 12,000 in 2009.

The government has revealed that it is allocating an addition £170 million to “shovel-ready” flood defense projects across England, according to Sky News. The funding, alongside an initial £5.2 billion investment, will help in the construction of 2,000 flood and coastal defenses that will protect 336,000 properties by 2027.

Several women who claim they were sexually abused by disgraced film producer Harvey Weinstein are pleading with a US judge to reject an US$18.9 million settlement with the former entertainment mogul, fearing that the deal would prevent the defendants’ Insurers from making bigger payouts. The settlement, first announced on June 30, would have allowed accusers to claim between US$7,500 and US$750,000 each.

The Financial Services Compensation Scheme (FSCS) has revealed that the cost of compensating customers of failed general insurance distribution firms increased by £10m in the year ended 31 March 2020. The cost for the year was £21m, compared to £11m in the preceding year, according to the FSCS’s 2019/20 Annual Report and Class Statements. FSCS highlighted that the main cost in the GI distribution class over the last few years has been related to payment protection insurance (PPI) claims.

Ten Insurance has had six new members joining the network during the coronavirus lockdown, according to Managing Director Dawn Derbyshire. Derbyshire said the appointed representative (AR) network is now gearing up for “sensible sustainable growth” over the next 12 months. “We’re keen to still help our members grow their overall book, but numbers of ARs are not necessarily in focus,” Derbyshire commented.

London-headquartered insurance Broking giant Aon Plc, which in recent weeks reiterated its job security commitment to Aon’s 50,000-strong global roster amid the coronavirus pandemic, has good news for its shareholders. “The board of directors has declared a quarterly cash dividend of US$0.44 per share on outstanding Class A ordinary shares,” announced the Irish-domiciled group over the weekend. “The dividend is payable August 14, 2020 to shareholders of record on August 03, 2020.”   

It’s time to put together an international action plan to deal with the crew repatriation crisis. Marine Insurer North P&I Club has delivered that conclusion on the back of a UK Government summit last week. Led by maritime minister Kelly Tolhorst, it addressed the impact of COVID-19 on crew working conditions and brought together representatives from the International Chamber of Shipping, the International Maritime Organisation and other associations.

 

 

 

Coronavirus-related News

The Financial Conduct Authority has alleged that Insurers’ approach to causation in the Business Interruption test case is “legally flawed” and the defendants have “overlooked” contractual contexts. The FCA is arguing on behalf of policyholders throughout the trial. In its skeleton argument, the regulator submitted that Insurers’ defences have a common theme on causation arguing that Covid-19 was not the insured peril. The regulator stated: “…namely that the proximate cause or ‘but for’ cause was not the insured ‘insured peril’ but something else and that something else is the nationwide outbreak of Covid-19 and the impact of it and/or of the government response to it.”

In other news...If Insurers disagreed with the government’s conclusions following a meeting with the industry that they would pay out based on March advice then they should have spoken out sooner and given politicians an earlier ‘opportunity’ to enforce mandatory bans, the Financial Conduct Authority has argued in its Business Interruption test case. On 17 March 2020, Insurers including Hiscox, RSA and Zurich – who are defendants in the FCA’s BI test case – and the Association of British Insurers, Lloyd’s, the FCA, the Prudential Regulation Authority and the UK Economic Secretary to the Treasury met to discuss business interruption insurance, the FCA detailed in it skeleton argument. The FCA said that subsequent statements by UK government members included: “Let me confirm that, for those businesses which do have a policy that covers pandemics, the government’s action is sufficient and will allow businesses to make an insurance claim against their policy.”

Guidewire Software has announced the results of a UK consumer *survey that shows how the COVID-19 pandemic is affecting attitudes towards insurance and Insurers. At a time of increased reliance on digital services for work and home life, the research reveals contradictions in what people regard as vital to them and what they are willing to pay to protect. For example, while close to three quarters (73 percent) of UK respondents rank their digital identity as most important to protect along with their clothes (61%) job and income (59%), and well ahead of items like jewellery (35 percent), only six percent have online identity insurance or job loss cover right now.

Six out of 10 insurance professionals have been contacted by consumers who have struggled to afford their insurance payments due to the impact of coronavirus. A poll of 221 Chartered Insurance Institute members in June showed 61 per cent had heard from consumers who could no longer pay their insurance premiums as their finances had been hit by the economic fallout of Covid-19. Four out of 10 (39 per cent or 87 insurance professionals) had not heard from any consumers struggling to afford cover because of the pandemic.

Large shipping losses hit a record low after posting a 20% year-over-year drop, according to Allianz Global Corporate & Specialty SE’s (AGCS) Safety & Shipping Review 2020. However, AGCS said that the COVID-19 pandemic could endanger long-term safety improvements in the shipping industry.

The latest Confused.com and Willis Towers Watson Car insurance premium index reported a fall in prices of 5% (£39) to £770 during the last quarter – marking the largest drop since early 2018. Indeed, drivers are, on average, paying £19 (2%) less in 2020 for car insurance than they did at the same point last year based on the data the firms gathered from almost six million car insurance quotes. At the heart of the decline, unsurprisingly, is the coronavirus pandemic with the drop in traffic prompting a fall in accidents, and therefore claims.

The emphasis businesses must place on the mental and physical wellbeing of their employees has rarely faced a greater spotlight than the COVID-19 crisis. At the very beginning of the government-mandated lockdown, mental health experts throughout the UK highlighted the challenges facing employees as they had to rapidly adapt to changes in their working practices. Now, as the lockdown is lifting and conversation is turning to a return to work, the great strides many businesses have made in addressing the wellbeing of their staff must not be repealed or reduced.

The COVID-19 pandemic has fast-tracked innovation in insurance claim management. In the claims space, the big question was: Can you move the entire workforce remotely and continue to perform the entire process of claim adjudication, handling and payment? And the resounding answer to that question has been ‘yes’ – with the some facilitating tools. For example various carriers and insurtechs in using machine learning and artificial intelligence to triage claims as they come in and improvements in fraud detection.

As UK Insurers look to prove their value in a post COVID-19 environment, one firm believes it may have a solution. CRIF Decision Solutions has ramped up the delivery of its open insurance solution, known as CRIF Digital Next, which provides access to open banking data and help Insurers with their understanding of consumer behaviour.

David Hopwood, Head of the newly merged Marsh Networks, has reported that mergers and acquisitions in the Broker space are likely to grow after a delay caused by the coronavirus pandemic. “When covid hit the M&A pace was put on pause as Brokers looks to deal with an increase in enquiries and claims. But we’ve now seen those conversations restarted and new Brokers are talking about selling.”

Insurers are going to tighten up how they work with Managing General Agents in the wake of the Covid-19 Business Interruption cover dispute. The coronavirus is also likely to increase market hardening, another area that will give Insurers pause for thought with regards to how they trade with MGAs, according to experts. Charles Manchester CEO of Manchester Underwriting Management commented “It’s a harder market now and policy wordings get narrower in harder markets. Insurers stand behind MGAs so they need to know what they’re signing up to.”

Up to 300 people are set to lose their jobs at Saga, the Provider has confirmed. A spokesperson for Saga said: “As part of our ongoing focus on improving efficiency within the business and against the backdrop of the continued suspension of travel due to Covid-19, we have started a process that will see a number of colleagues leave Saga. We appreciate this will be a difficult time for all of our colleagues and are focused on ensuring they receive all the support they need.” It is believed that the majority of jobs affected will come from its travel division, but the insurance section may also be affected. However Saga did not provide a breakdown.

Employees and their families at Zurich Insurance are set to benefit from COVID-19 antibody testing. The Insurer is introducing the one-benefit for all employees and families living in the same house over the age of 18 after a successful pilot in Switzerland. The plan is to roll out a full-scale offering globally.

History has proven that times of economic crisis traditionally see a huge increase in insurance fraud across most lines of business, and with COVID-19 impacting lives on a level not seen in living memory, fraudsters will be looking for new ways to cash in. According to the Association of British Insurers (ABI), the recession of 2008 saw a total of 107,200 false insurance claims worth £730 million. This was a 17% increase compared to the previous year, when fraudulent claims totalled £560 million.

The American Steamship Owners Mutual Protection and Indemnity Association (the American Club) has partnered with ABSG Consulting – a risk management subsidiary of ABS, to provide education, training and insurance guidance on maritime cybersecurity. With maritime owners and operators relying more heavily on smart technology and operational data, cybersecurity has become a business imperative, according to ABSG Consulting. New cybersecurity measures will have an impact on how maritime vessels and facilities are covered by Insurers.

The insurance industry is poised to overcome the COVID-19-induced global recession, according to a report by Swiss Re Institute. The recession – the sharpest economic contraction since the 1930s – will lead to a slump in demand for insurance this year, especially for life products, Swiss Re Institute predicted. Global premiums are expected to contract by 6% for life cover and 0.1% for non-life covers. However, total premium volumes are expected to return to pre-crisis levels in 2021, according to the institute. Non-life premium volumes are expected to rise to above pre-crisis levels, while life volumes are expected to remain below. Emerging economies, led by China, are expected to drive the industry comeback.

 

 

Declan O’Rourke, who was General Manager at AIG Ireland until June 2020, is making the switch to Aviva Insurance Ireland in September to assume the role of Interim Chief Executive. Late last year former Aviva Insurance Ireland CEO John Quinlan was reported to be on leave for undisclosed reasons. At the time, Aviva’s then Group Chief Operations and IT Officer Nick Amin was tapped to take over Quinlan’s duties temporarily.

On the back of a merger between Cobra London Markets and Citynet Insurance Brokers, Spike Dolphin has made the switch to the firm. He joins as a London Market Broker, having previously been with Tasker & Partners for five years.

Global specialty Insurer and Reinsurer Brit Limited has announced two new appointments to its recently launched Private Client team. Andrew Thorn has been named as a Senior Underwriter and Alex Brice has joined as an Underwriter.

Beach & Associates has bolstered its ranks as it looks to develop a new transportation portfolio. Christopher Williamson has joined the wholesale division and will be based in the London office and it has brought in James Wells to develop the portfolio; both will be reporting to CEO of wholesale John Sutton.

The name behind Syndicates 1975 and 1991 has bolstered its ranks. Coverys Managing Agency Limited has brought in Xiaohan Fang as an Underwriter for the 1975 syndicate, bringing with him a decade of actuarial and pricing experience. He is set to focus on underwriting North American Medical Professional Liability business.

Previously he was the UK CEO of Commercial Risk Solutions, Health Solutions and Affinity at Aon, but now Andrew Tunnicliffe is returning to the brokerage giant to take on a new role. From July 27, Tunnicliffe will become UK Chairman, Global Speciality, furthering a career that has also seen him in the positions of COO for the Commercial Risk Solutions, Health Solutions and Affinity Division in EMEA, and CEO of Aon Global Risk Consulting. He returns after a brief period of retirement.

Ryan Specialty Group Europe has expanded the underwriting capabilities of RSG Transactional Risks Europe (RSG TRE) with the hiring of Will Gay. RSG TRE is a specialised Managing General Underwriter focused exclusively on providing Transactional insurance to the Mergers and Acquisitions sector. Gay will focus on Commercial Tax Liability insurance together with Kerry Westwell, Head of Tax at RSG TRE. Gay is a senior Tax Lawyer, and joins RSG TRE from private practice. He has advised clients on a full range of tax matters, including complex cross-border M&A deals, private equity advisory work, and large commercial UK and European real estate transactions.

One industry giant has shown its commitment to the UK’s regions with a key appointment. Gavin Phillips will become Financial Services Leader for the regions at PwC, helping grow the business outside London. Currently the interim Senior Partner for PwC’s Gatwick office, he will join the leadership team working with UK financial services leader Andrew Kail. He brings with him an extensive insurance background having started his career by joining one of Lloyd’s of London’s graduate schemes and later spending four years in New York.

Trade Credit insurance specialist Atradius has bolstered its ranks once again. Having recently appointed Stuart Ramsden as Regional Director, the company has now added James Burgess as Head of UK Commercial.

AIG company Talbot Underwriting will soon be introducing a new Chief Financial Officer (CFO). From September 28, the company will add Catherine Barton to its ranks as she joins the board, succeeding Nigel Wachman who will retire from the firm after 20 years of service.

Randall & Quilter Investment Holdings (R&Q) has revealed that Ken Randall, Co-founder and Executive Chairman of the company, will retire and step down as a Company Director effective March 31, 2021. The announcement follows the January appointment of William Spiegel as Executive Director and Deputy Group Chairman. Spiegel will succeed Randall as Executive Chairman effective April 01, 2021.

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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