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General Insurance Newsletter Friday 18th April 2019

19 Apr 2019

Insurance News

Motor provider ERS has revealed that its major shareholder, Aquiline, has decided not to sell the organisation following a strategic review. Aquiline has committed to continuing to invest in the company contrary to revealing last September that it was considering selling ERS.

The Vice President of Business Innovation at software platform Guidewire, Laura Drabik, has discussed the impact of InsurTech on Brokers, outlined key InsurTech trends and explained how Brokers can use technology to get ahead. Though she stated that the U.K. is second to the U.S. for exciting start-ups she believes that: “In the past five years insurance got exciting.” One of the major themes that she has identified is the rising interest in services on-demand, coinciding with the movement of customers as owners of risk to users of risk. Addressing the relationship between Brokers and Insurtech, Drabik declared: “It’s not InsurTech or nothing, it’s about options, its about serving customers how they want to be served." In order for Brokers to keep pace with advancements, she advised that they should get educated and stay informed, suggesting that knowledge should ease fear and that technology risks “grow with complexity over time...InsurTech is about empowering the human, it doesn’t replace the human."

Capacity for Construction and Engineering is shrinking according to a report by Mactavish and could lead to problems getting cover for some firms. The company said the changes are being caused by insurance ‘capacity blackspots’ hitting certain industry sectors that have benefitted from a long period of attractive insurance pricing but have now become so complex that insurance companies are reluctant to underwrite the risks. For example, Professional Indemnity risks in construction and engineering have skyrocketed in recent years as projects become larger, technically more advanced and involving more stakeholders and more demanding contracts.

After six months of rising prices in the second half of 2018, Car insurance premiums fell by 1% (£12) to £762 in Q1 2019, according to the Willis Towers Watson and Confused Car Insurance Price Index. Comprehensive Car insurance premiums have fallen for the first time since H1 2018, with UK motorists now paying £762 on average, some £5 less than they were paying this time last year. This also represents the smallest annual shift in prices since 2015.

The Financial Services Compensation Scheme (FSCS) has further extended the deadline for Broker CRL Management to find an alternative Insurer to provide replacement cover for Alpha policies. The Broker now has until 30 April to find new cover for Latent Defect and Structural Damage insurance policyholders whose policies terminated last August. Unrated Danish provider Alpha went bankrupt in May last year and at the end of March the regulator extended CRL’s deadline by two weeks.

The Financial Conduct Authority (FCA) has reminded Brokers that they must prepare sooner rather than later for the implementation of the Senior Managers & Certification Regime (SM&CR). The regime has already been rolled out to insurance companies and Brokers authorised by the Financial Services and Markets Act (FSMA) must be ready to abide by the rules by 9 December 2019. Under the regime, all senior managers must have a Statement of Responsibility – which should be clear enough for everyone to understand what activities the Senior Manager is responsible and accountable for in the business. 

In other news... The Financial Conduct Authority (FCA) has published its Business Plan for 2019/20 which showed its key focuses for the year will include dual pricing and fairness for loyal customers. Brexit planning was also listed as a prime concern.

In further news... The Financial Conduct Authority (FCA) has set a budget of £537.7m for the year 2019/20 which represents a 2% increase on last year. The regulator, which is currently consulting on the proposals, stated that it is “committed to delivering an ORA [ongoing regulatory activities] budget that is flat in real terms”. The document detailed that £29m in fees would be collected from regulated firms doing general insurance mediation. This is a 3.4% increase on last year’s figure which hit £28.1m.

The British Insurance Brokers’ Association (Biba) has announced it is working with Magenta Insurance to provide members with an Escape of Water (EOW) scheme. According to Biba, Magenta, which is part of the inet3 Group, takes a two-pronged approach. Firstly, it uses leak detection technology (Waterlock) to protect policyholders and help prevent claims. Secondly, it offers flexible underwriting of Household insurance with discounts for customers using the technology.

Legal & General Investment Management (LGIM) Deputy Chief Investment Officer Sonja Laud stated “This is an exciting step in our analysis of the energy transition.” when LGIM unveiled the results of its year-long review of the global energy system and the opportunities for decarbonisation. Through its collaboration with management consultancy Baringa Partners, LGIM has created an investor-focused model aimed at facilitating construction of fully independent energy scenarios. Called “Destination,” the model is designed to inform subsequent, long-term investment decisions and develop dynamic pathways for the energy system. LGIM said it used the model to construct a deeply decarbonised scenario for the energy system that is consistent with global warming of no more than two degrees and approaching an emissions profile consistent with less than 1.5 degrees.

The proxy battle between Argo Group International Holdings, Ltd. and Voce Capital Management LLC has begun and the Bermuda-headquartered Underwriter is calling on stockholders to support its board in “critical” vote. Back in February those who own shares in Argo were issued a nearly 6,700-word long letter from activist investor Voce, which highlighted the specialty Insurer’s supposed “shockingly inappropriate” corporate expenses involving Chief Executive Mark E. Watson III.

Game of Thrones fans, ever wondered how much an insurance policy for the Winterfell Castle would cost? Irish Broker part of broking group Hooper Dolan Insurances Ltd, came up with a mock policy detailing how much The King of The North would have to shell out for Home insurance – structure & buildings as well as contents – to protect one of the largest castles in Westeros. First, had to determine the cost of rebuilding the three-acre fortress and its surrounding structures. With the help of engineers, was able to reach the approximate amount of over €895 million. Contents, meanwhile, were estimated to be worth €50 million.

Fenchurch Law will be busy holding Broker-focused regional events between June and November. Shining a spotlight on current coverage and claims disputes issues, the four symposiums will take place in Leeds, Bristol, Manchester and Belfast. No further details have been provided, only that the events will mainly revolve around Construction, Professional Risks and Property and Commercial perils.

Chubb’s commercial customers in the UK and Ireland, as well as in Continental Europe, have a new benefit at their disposal. The Insurer’s free Environmental Incident Alert service – which is already available in North and South America, Asia-Pacific and Africa – is now operational for European commercial clients of all sizes. It was designed to help customers mitigate potential liabilities associated with environmental releases, access qualified incident response contractors and monitor clean-up costs.

While insurance companies have yet to fully get behind the idea of Ridesharing – or even gig economy businesses, in general – the revolutionary business models continue to disrupt the industry. Ridesharing companies Uber and Lyft have taken insurance matters into their own hands, largely managing their own risk. However, both companies are also treading in uncharted territory when it comes to insuring a risk profile even actual Insurers do not have enough information on. In announcing its initial public offering, Uber revealed in regulatory filings that it uses a combination of third-party insurance and self-insurance to protect against risks related to its ridesharing business. But as it expands its offerings to include freight, autonomous vehicles and electric scooters, among other things, its insurance needs are expected to grow as well. Uber’s filings also noted that its insurance reserves totaled US$2.94 billion at the end of 2018, up from US$2.0 billion at the end of 2017. By the end of 2016, the company’s insurance reserves totaled US$712 million. Meanwhile, Lyft had set aside US$863.7 million in its captive insurance subsidiary at the end of 2018, compared to US$360.9 million in 2017, the company revealed in a public offering document.

In response to the decision by the EU to grant a further extension to the already delayed Brexit, the Association of British Insurers' (ABI) Director eneral Huw Evans offered the following insights: “While it is a relief that the UK will not crash out of the EU without a deal tomorrow (April 12), this extra time must be put to good use.... It is vital Parliament agrees a way forward that ends the ongoing uncertainty for customers and the industry. We simply must not end up in the same position again in October.”

As part of its action plan, Lloyd’s of London has set up a hotline aimed at helping those experiencing harassment within the market, which is now ready to take calls round the clock. Available to everyone who works in the Lloyd’s market, the 24/7 “Care First Bullying & Harassment” support line was set up to provide advice and information to those suffering from these acts at work and assist them in deciding on their next steps. This month Lloyd’s has committed to appointing women as part of its governance committee. 

This week, 856-year-old Notre-Dame de Paris has been hit by a blaze while undergoing restoration work. In terms of which company insures the cathedral, technically it isn’t covered, with it being owned by the French state which essentially acts as the Insurer. However, it’s now been revealed who provided Civil Liability insurance to two contracting firms involved in the rebuilding that was taking place before the beloved property went up in flames. According to a Financial Times report, Paris-headquartered AXA is the insurance provider for contractors Europe Echafaudage and Le Bras Frères. In addition, certain artefacts and ceremonial objects in the Notre-Dame are insured by the French Insurer’s art division. “The cause of the fire is currently under investigation,” the publication quoted AXA as saying in a statement. “All AXA teams are fully cooperating with the state services to aid in the process.” Further to this, the UK’s largest Insurer of Grade I listed buildings Ecclesiastical Insurance has offered its support following the devastating fire. Mark Hews, Group Chief Executive of Ecclesiastical Insurance commented: “It was absolutely heart-breaking to see such a beautiful, spiritually and historically significant Cathedral engulfed in flames. Our thoughts are with the people of France as they come to terms with the damage to such an iconic building... We stand ready to join others in providing as much help as we reasonably can to support the restoration. To this end, in conjunction with our parent charity, Allchurches Trust, we have offered to provide significant practical assistance and advice to Notre Dame during this difficult time. Further details will follow."

Legal & General is pouring a total of £44.6 million into a ground-breaking housing initiative for the benefit of Croydon and neighbouring boroughs. In partnership with Croydon Council, the British Insurer is investing the amount to provide 167 homes to families on the housing waiting list. As part of the collaboration, the properties will be leased to the council on a 40-year term, with rents set at local housing allowance levels. After four decades, the homes will belong to Croydon Council.

Rural Insurer NFU Mutual has once again won the Gallup Great Workplace Award. This year’s victory marks the fourth consecutive recognition for the British firm. It points to NFU Mutual’s engaged workforce in the areas of strategy and leadership; accountability and performance; communication and knowledge management and development and ongoing learning.

Arch Insurance (UK) Limited – or what used to be known as Arch Insurance Company (Europe) – is on a roll. The London-based enterprise, which is part of Arch Insurance International, has seen another purchase cross the finish line. Earlier this month its swoop for Axiom Underwriting was finalised; now the deal to snap up Obelisk Underwriting has been sealed. Generating approximately £5 million in gross written premium last year, the specialist underwriting agency brings two offices and its team to the growing Arch UK regional division. “We are delighted to be joining the Arch UK regional team at such an exciting time,” commented Perry Askew, who has served as Director at Obelisk for a decade.

InsurTech start-up Inzura has partnered with MiTAC Digital Technology Corporation (MDT) on a fully integrated telematics dash cam solution for the Motor insurance sector. The business stated that the solution will help provide real-time feedback through its advanced driver assistance systems (ADAS) to help reduce accidents, increase safety and increase claims processes. A spokesperson for Inzura confirmed that the dash cam solution is available to Brokers as well as providers.

PIB has confirmed that it has engaged Deloitte as it seeks to expand further into Europe. The consolidator began working with Deloitte two months ago in order to raise the funds required to pursue its European aims. CEO Brendan McManus said that the business is seeking a figure between £100m and £200m. 

Lemonade, the insurance company powered by artificial intelligence and behavioural economics, has announced the signing of a $300 million Series D funding round led by SoftBank Group, with participation from Allianz, General Catalyst, GV (formerly known as Google Ventures), OurCrowd and Thrive Capital. The investment will fuel the AI-powered insurance company’s global expansion, bringing total funding to date to $480 million.

Winning the Cyber Broker of the Year trophy at the 2018 UK Broker Awards has made it easier for Wilby Insurance Brokers to discuss Cyber, according to Managing Director Richard Blackburn. The Cyber Broker category was introduced last year and it returns this year along with a new award for Brokers concerned with diversity and inclusion.

Geo Underwriting, as part of The Ardonagh Group, is pleased to announce that Geo Europe, based in Rotterdam, the Netherlands, has now been licenced by the Dutch Authority for the Financial Markets (AFM). Geo Europe headed up by Chief Underwriting Officer, Walter Craft, will act as a gateway for European business across the Group and platform to develop and launch specialty solutions for European Markets.



Market Movers and Shakers

UK & Ireland president Clive Nicholls is leaving Crawford & Company. According to the Atlanta-headquartered claims management giant, Nicholls has decided to retire effective September 30. The departing executive will continue in his capacity until a successor is named and the search is now ongoing.

Less than six months after Stefan Puttnam became joint Managing Director of PIB Insurance Brokers and Lorica Insurance Brokers he has decided to move on. Puttnam left at the end of March and staff will now report to the CEO for PIB Group’s retail specialty division, Nigel Salisbury, for an indefinite period of time. A spokesperson commented: “Stefan has made a valuable contribution, including all the work involved in combining the talent and resources of PIB Insurance Brokers and Lorica Insurance Brokers to operate as a consolidated entity."

Nick Milton is no longer the Regional Director for Midlands & South West within Pen Underwriting’s commercial division. Promoted to the role of UK Sales and Distribution head, Milton will now be in charge not only of the day-to-day management of Pen’s 16-strong national sales team but also of the strategic expansion of the firm’s Broker relationships in the country.

Brussels-headquartered Ageas has tapped its Chief Risk Officer (CRO), Filip Coremans, to become the company’s first Chief Development Officer (CDO). Effective June 01 2019, the appointment will also see the creation of a dedicated development office. This is in line with the insurance group’s strategy which was unveiled last year. In addition, high-profile figures, Tara Waite and Jeremy Haynes have joined Ageas’ UK Boards. According to Ageas, both Waite and Haynes have decades of financial services experience. Waite has been CEO of RSA Insurance Group’s Latvia business and Managing Director of the firm’s UK SME and Delegated Authority business and most recently she was Wonga’s CEO until January 2019. She left RSA to join Wonga, which went into administration last year, in 2014.

HDI Global SE (HDI) has announced the appointment of Paul Williams as Head of Underwriting UK – Corporate Risk. Paul, currently Head of UK Corporate - North and Scotland, has been promoted to the role following the retirement of Kevin Armstrong and has assumed his position with effect from 1 April 2019. 

The Standard Club, the world’s fourth largest P&I club, has appointed Jamie Wallace to the role of Legal Director. The role, will manage the key legal functions for the organisation, including supervising the handling of Defence Class claims, promoting the club’s policies on legal issues and managing the implementation of key processes. 

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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