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General Insurance Newsletter Friday 19th July 2019

19 Jul 2019

Insurance News

In 2010 only five commercial operators had permission to fly drones in the UK. By August 2018, that figure had soared to 4,530, as a growing number of businesses are now exploring the potential benefits of drones and considering introducing them into their operations. Common examples of drones being used for business include delivery companies sending items directly to the addressee, security firms using them to monitor properties and land remotely or surveyors using drones mounted with HD cameras to pick up small cracks or other damage to property and to assess hard-to-access structures such as bridges or skyscrapers. In the insurance space, drones are also having a big impact. At Zurich, they have previously used drones across the world to assess damaged properties in dangerous locations, enabling claims to be processed quicker, for example. There are complex restrictions about how and where drones may be used. Any organisation hoping to fly drones for commercial purposes in the UK must first obtain Permission for Commercial Operations (PfCO) from the Civil Aviation Authority.

The Ogden discount rate will be increased from -0.75% to -0.25%, reducing the amount Insurers will have to pay to accident claimants. The new rate will be effective from 5 August 2019 and will be reviewed within a five-year period. A statement from Lord Chancellor and Justice Secretary David Gauke MP announcing the change has been published. The Lord Chancellor wrote: “Having completed the process of a Call for Evidence and statutory consultation with the Government Actuary and HM Treasury, I am satisfied that the rate should be minus 0.25%.” A full statement of reasons will be filed separately in the Parliamentary libraries.

The Association of British Insurers commented: “This is a bad outcome for insurance customers and taxpayers that will add costs rather than save customers money,” said Huw Evans, Director general of the ABI. “A negative rate maintains the fiction that a claimant and their representatives will knowingly choose to invest their damages in a way that would guarantee losing them money. This will remain the lowest discount rate in the Western world, leaving England and Wales an international outlier at a time when we need to boost our attraction to international capital.” Zurich also commented: “Despite a lengthy engagement with the insurance sector on how to achieve a balanced rate, we are greatly disappointed with the announcement,” said David Nichols, Zurich’s Chief Claims Officer. “It’s essential that claimants get the compensation they are entitled to following an injury. However, the Government’s failure to change the discount rate to a balanced level will only serve to increase the cost and, therefore, affordability of certain types of insurance. This rate is likely to reduce both market coverage and affordability for higher risk customers such as road hauliers, commercial fleets, young drivers and older drivers. It will also have a financial impact on Public Liability cover for the public sector and businesses.” 

Hastings Group has stated that it expects the change in the discount rate to -0.25% to result in an £8.4m one-off pre-tax charge for the company in 2019. In a statement on the stock exchange, Hastings said: “As previously indicated, the group’s insurance subsidiary has held best estimate reserves consistent with an Ogden rate in the range of 0% to 1%, in line with the range indicated by the government previously and the rate at which large bodily injury claims have been settling. “The company can confirm that the best estimate will now be updated to reflect the change in the Ogden rate to -0.25%.”

Car thefts are more likely to happen in East London’s Ilford and Romford postcodes than anywhere else in the UK, according to price comparison site MoneySuperMarket. MoneySuperMarket analysed 5.9 million car insurance quotes between May 2018 and May 2019 to identify which postcodes across the UK are the most and least likely to be susceptible to car theft. Ilford and Romford postcodes topped the list, with a car theft rate of 16.1 and 15.4 per 1,000 quotes respectively. They were followed by Birmingham (13.1), Halifax (10.6), Liverpool (9.6) and Southend-on-Sea (9.3).

In further news...The Financial Conduct Authority (FCA) has issued a warning that price comparison website Moneysupermarket has been cloned. Fraudsters have been attempting to trick customers by pretending to be the aggregator. The regulator warned that scammers may use Moneysupermarket’s real details to fool customers, including the aggregator’s FCA firm reference number. The clone firm has been operating through a fake website, with a URL similar to that of the official site. The main differentiator is that the fraudsters have branded themselves as ‘The Money Supermarket’, rather than Moneysupermarket.

The Chief Executive Officer of Arthur J. Gallagher believes that small generalists are on thin ice as they face the inevitability of consolidation with larger brokerage firms. In an interview with Financial Times, Gallagher CEO Patrick Gallagher said that the key to the survival of small generalists is to shift gears and become specialists. “Ultimately, if you’re just a local generalist your survival days are limited,” said Gallagher. “You need to be specialist.”

After dipping slightly last quarter, the cost of an average car insurance policy in the UK jumped by 3.5% in the second quarter of 2019. The average premium for a comprehensive car insurance policy stood at £789 for Q2, up from last quarter’s £762.  Premiums also saw an average 5% annual increase, up from around £27 in the last quarter. The data was compiled from almost six million customer quotes by insurance Broker Willis Towers Watson and price comparison site Confused.com.

Ireland’s Justice Minister Charles Flanagan believes that the lack of transparency in how Insurers set auto and business premiums suggests that they are just “plucking figures from the sky.” The Justice Minister was reacting to statements made by the Chief Executives of AXA, Allianz and FBD to the Oireachtas finance committee earlier this month, justifying high premiums by claiming that up to 20% of personal injury claims showed signs of fraud, despite having reported no more than 1% of suspected fraudulent claims to the gardai.

The British Insurance Brokers’ Association (Biba) has warned that scammers are using its name to target Brokers, offering Biba Conference delegate data. In a tweet, Biba said: “If you’ve been approached about buying a list of Biba conference attendees this is a scam. We never release personal details.” It further asked members not to engage with these approaches, stating “we do not pass data to any third party”. A Biba spokeswoman said that the organisation had an audit done at the time of the conference to confirm it had not had a data breach.

International hedge fund, Elliot, has acquired a stake in Saga which offers insurance and travel to the over-50s market and floated on the Stock Exchange in 2014. According to a regulatory filing on the Saga website the fund has bought a 5.141% slice of the business. The deal completed yesterday (16 July) in the UK. A Saga spokesperson said: “We have good and open relations with all of our shareholders and expect to be in contact with Elliott shortly.”

The Financial Conduct Authority (FCA) has launched a consultation on proposals to help consumers with pre-existing medical conditions (PEMCs) have improved access to Travel insurance solutions. The consultation will take place until 15 September 2019. It looks to discuss the introduction of a new ‘signposting’ rule which it says should offer clients with details of a directory of Travel insurance firms that have the appetite and capability to cover consumers with more serious PEMCs. 

In further news...The Financial Conduct Authority (FCA) has reiterated its concerns around pricing practices in financial services, including dual pricing. The regulator has published a fresh feedback statement following on from a discussion paper launched in 2018 to debate fair pricing. “The fair treatment of existing customers is an ongoing priority for the FCA – as part of this work, we’re focusing on the fairness of pricing and tackling the potential harm caused by certain pricing practices,” the FCA noted.

The University of the West of England (UWE Bristol) and the Chartered Insurance Institute (CII) have started a post graduate MSC Risk Management and Insurance course, which will be offered from next January. Representatives from Insurers and Brokers will deliver guest lectures and signed-up students will have access to work shadowing. And upon completion of the course the path to the CII’s qualifications such as the ACII will become shorter. The programme can be applied to through the UWE Bristol website and according to the CII is made to prepare graduates for managerial roles in the sector. It also added that it is supposed to develop key skills in risk management and insurance, while creating a deep understanding of the current business environment.

Specialist insurance provider, CFC has launched a range of free risk management services for technology companies. The risk management portfolio includes: a Cyber risk rating report from BitSight; the CFC RepKnight breach monitoring service; a Cyber incident response plan builder and training and education on Cyber risks and legal contracts. CFC has detailed that the policy is targeted at a wide range of technology firms and should aid in covering the costs associated with a range of traditional and emerging risks that technology businesses are vulnerable to in the day-to-day running of their company.

AssuredPartners has bought Hettle Andrews & Associates for an undisclosed sum. The transaction is subject to customary approval by the Financial Conduct Authority. Based in Birmingham, Hettle Andrews is an integrated risk management and insurance broking firm, focused on the education, charity and corporate sectors in the United Kingdom. According to a statement from AssuredPartners it was co-founded in 2004 by Jon Hettle and Jo Andrews, the business employs over 30 people and records gross written premiums of over £20m per annum for its clients. All staff and Directors will stay with the business and the office will remain in its current location. AssuredPartners described itself as the fastest-growing, independent insurance agency in the United States. 

The Financial Services Compensation Scheme (FSCS) has stated that Broker, CRL Management is set to reach a deal with an Insurer to provide replacement cover for Alpha policies soon. The Broker, which is an appointed representative of BCR Legal Group, has previously had its deadline to secure replacement cover extended several times following the collapse of unrated Danish provider Alpha in May 2018. The FSCS explained it has been working with CRL since May last year to find cover for Alpha’s 10-year latent defect/structural damage insurance policies, which lapsed on 11 August 2018 in accordance with Danish law. The organisation said in a statement: “We appreciate the difficult position that many CRL Management/Alpha Insurance customers currently find themselves in, in light of the continued uncertainty surrounding replacement cover being secured. “By far the best outcome here is for BCR/CRL to be successful in arranging replacement cover with a new, solvent Insurer.”

Lloyd’s has confirmed that its proposals to modernise the market have received widespread backing from stakeholders. The transformation plan, launched as the Future at Lloyd’s on 1 May this year, can now begin following the consultation period. According to Lloyd’s the consultation on the six transformational initiatives proposed generated more than 4,000 insights over a 10-week period, including almost 500 online survey respondents and 300 interviews involving more than 600 people.

The House of Commons Committee of Public Accounts has urged regulators in the financial services, water, energy and telecoms sectors to work together to prevent consumers being exploited. The committee argued that the regulators in these sectors have a statutory responsibility to protect the interests of customers, particularly vulnerable consumers. It detailed that the problems faced are often the same across all sectors – difficulty with switching to better deals, paying bills, mounting debts and understanding complex information.

A shortage of capacity in the Professional Indemnity insurance and Public Liability insurance space has resulted in approved inspector Aedis Regulatory Services being left without insurance. The building control service business said in a statement on its website that the type of insurance needed can only be accessed through a scheme approved by the government. The statement continued: “Currently, there is only one insurance Broker able to offer insurance to approved inspectors. “The Underwriters of this scheme have been reviewing their position and several approved inspectors (including Aedis) have been unable to secure cover upon renewal.”

Leading Legal Expenses insurance provider ARAG plc has hailed the landmark Court of Appeal judgment in West v Stockport NHS Foundation Trust and Demouilpied v Stockport NHS Foundation Trust as a triumph for access to justice for the victims of clinical negligence. The judgment addresses how the key principles of reasonableness and proportionality should be properly applied when assessing the validity of the block-rated After-The-Event (ATE) insurance premiums that have been used to help fund clinical negligence actions since the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (LASPO).

As the 50th anniversary of the Apollo 11 moon landing is upon us, it is time to remember the first man to set foot on the man Neil Armstrong once estimated the Apollo 11 landing mission only had a 50 per cent chance of a successful landing. As the Saturn V rocket left the Kennedy Space Center with thousands of litres of kerosene and over a million litres of liquid oxygen on board unsurprisingly, according to David Todd, Head of Space Content at Seradata Ltd, the Space Industry’s leading launch satellite database, only a few life Insurers were willing to offer competitive or affordable cover to the first astronauts to set off to the moon. According to Mr Todd, who is assisting with the creation of an insurance museum in London, some insurance companies wanted to offer the Apollo 11 crew life insurance virtually for free, in exchange for the extensive publicity they would gain regardless of the outcome of the mission but their offers were declined.

For the fourth year running, the definitive Women Count report has found that there has been no progress on gender diversity in senior roles in the FTSE 350. Funded by The Pipeline, the UK’s leading business diversity business, this research tracks the number of women in executive positions and on Executive Committees. Despite the government setting a target for there to be a third of women in leadership positions at these companies by 2020 and despite a flow of formal reviews into this area including by Lord Davis and Hampton Alexander, Women Count 2019’s results show this has been another wasted year of little to no progress.

Zurich's flexwork approach sees great results. Zurich UK is tackling the gender pay gap head on with a newly launched first of its kind initiative to advertise every vacancy as a potential part time, job share or full time working opportunity along with agile working. This, coupled with the use of gender-neutral language in every job advertisement, has already generated significant change. Just three months on, the business has seen a 25% increase in the number of females applying for jobs across all levels of the business. This is particularly prominent around senior management roles which has seen a more pronounced percentage increase of 45%. The initiative was introduced in March following internal analysis of Zurich’s gender pay gap. The business worked with an external research agency to help identify the underlying causes of the gender pay gap and ways in which to reduce it. The research highlighted the need to attract more women to senior and technical roles at Zurich. Many of these roles have not previously been available on a part-time or flexible basis.

 

Market Movers and Shakers

Arc Legal Assistance (Arc Legal), a leading provider of Legal Expenses insurance (LEI) and assistance services in the UK and Ireland, has boosted its commercial team in response to continued business growth. Tim Mullin joins the business as Corporate Relations Manager, whose focus will be on maintaining and developing the close business relationships Arc Legal has established with its corporate partners. Tim was previously Head of Product Development & Partnerships at Composite Legal Expenses. Arc Legal also welcomes Sam Cassidy in the position of Marketing Manager. Sam has over 15 years’ experience in marketing communications management, most recently within Birketts LLP, a top 100 full-service law firm. Sam will be responsible for managing all marketing and PR activities within the business and developing the company’s brand in the market. Two new Corporate Relations Executives; Lucy Pringle who joins the team from RSA and Stephanie Burgess who previously worked for R3 Group. Both Lucy and Stephanie will be responsible for supporting the management and development of corporate business relationships.

Saga plc, the UK’s specialist in products and services for life after 50, is pleased to announce the appointment of Jane Storm as Chief People Officer with effect from 1 October 2019. Jane has c. 25 years’ experience in Human Resources and is currently Chief People Officer at Connect Group plc, the UK specialist distributor operating in newspaper and magazine wholesaling. Her experience includes advising businesses on becoming more customer centric and digital in their operational focus and outlook.

Nottingham’s largest independent insurance Broker, Russell Scanlan, has welcomed a new appointment to its growing team. The firm of 35, which is based in Wellington Circus, has appointed Julian Tadd as a Commercial Account Handler as part of its plans for continued growth. Julian joins Russell Scanlan with over 13 years’ industry experience working as an Account Handler, having held similar positions working across a range of corporate and commercial accounts at East-Midlands-based Brokers, Gordon Wood Insurance and Towergate Insurance Brokers.

Coversure is delighted to announce that Abbie Alldread has taken over the reins as the franchisee for the Biddulph office. She takes over from the previous franchisees who, after many successful years running the business, have decided to retire. Since beginning her insurance career at Coversure Macclesfield, Abbie has gone from strength to strength in the industry, including most recently working as Sales Director for Insurance Revolution.

KPMG welcomes Graham Boffey as Insurance Partner in its Financial Services Consultancy team. Graham will work closely with the Head of Insurance, Simon Ranger, to support clients right across the UK market as they grapple with rising costs, new risks and an unpredictable geopolitical agenda. Graham joins after a prolific career in insurance including, most recently, acting as Head of UK Distribution at Zurich Insurance Company Ltd. After starting his career at IBM and Barclays, Graham spent more than a decade at Aviva, where he fulfilled many roles including CEO of Aviva Healthcare and later, Managing Director of Corporate Benefits.

Evan Waks has been appointed as Ageas UK’s Chief Risk Officer (CRO) and will start with the business in September. Evan is an experienced insurance professional with a career spanning thirty years in the industry. He joins from AXA where over 17 years he held a number of roles in Finance before becoming CRO. Prior to this, Evan worked for Fedsure Group, a medium sized South African based Financial Services Group. As part of Ageas’s executive team, Evan will contribute to the leadership and decision making of the wider UK business as it focuses on its profitable growth. In his role, Evan will have responsibility for Risk, Compliance, Legal and Company Secretariat for the UK business.

Chris Guillaume, formerly CEO of software house Open GI, has now left the CEO role to become an NED. When Guillaume left the CEO position in May this year it was revealed he would take up a non-exec role. Simon Badley succeeded Guillaume as CEO on the 2 July and, following a small period of overlap, Guillaime exited the CEO position on 12th July. 

Victor Insurance, which described itself as the world’s largest Managing General Underwriter (MGU), has announced the promotion of Commercial Director, John Stephenson, to the position of Country Manager, UK. The CEO-equivalent role is being vacated by Paul Drake who is set to retire in September this year. Stephenson, who joined Victor Insurance UK, then named Bluefin Underwriting, in 2014, has more than 20 years’ experience in the insurance industry. He started his career with UK Broker Helm Group, then spent seven years at Bluefin Insurance Services, where he held a number of positions before being appointed commercial director of Bluefin Underwriting in 2015. John Stephenson who has taken up the country manager role, UK at Victor Insurance, outlined his plans to take the managing general underwriter forward. He started the role with immediate effect. Stephenson said the first step was to canvass to UK Brokers about what they want to see from the provider. “We are developing a Broker-centric strategy.” He added: “We are in a process of reaching out to Brokers to understand that. We want to listen to our Brokers.”

American International Group, Inc. has announced that James “Jamie” Love will join the company as Global Head of Real Estate, effective August 6. Mr. Love will be based in New York and report to Peter Zaffino, AIG’s Global Chief Operating Officer and Chief Executive Officer, General Insurance. Mr. Love will be responsible for aligning AIG’s global Real Estate footprint with the company’s overall operational and financial objectives. In his role, he will lead strategic planning for AIG’s owned and leased assets. “We continue to enhance operational capabilities as we work towards restoring AIG as the leading insurance company globally,” said Mr. Zaffino. “Jamie’s proven leadership across all facets of corporate real estate will help us further align our global real estate footprint with our business objectives.”

Exeter-based national technology firm Software Solved has announced that Lindsay Lucas has been appointed as its new Managing Director. The company provides digital business solutions through custom software design, online customer portals and data solutions for major brands including the likes of RSA, AXA XL and HSF. With its headquarters in Exeter, the company celebrated its 20th anniversary last year.

 

 

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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