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General Insurance Newsletter - Friday 1st December 2017

01 Dec 2017

Market News

BIBA has warned that further delays to the Ogden rate decision would "exacerbate" the problems already caused by the reduction to 0.75% earlier this year. This was in response to the Justice Select Committee's Pre-Legislative Scrutiny of the Discount Rate draft clause, which the Government intend to use to amend the Personal Injury Discount Rate for catastrophic claimant awards. According to BIBA Executive Director, Graeme Trudgil “The Committee has indicated it would like to see more evidence of how claimants invest their damage awards if the Government wants to maintain the objective of 100% compensation – something which is fundamental to the principle of indemnity in insurance. While more evidence may be useful to provide confidence that claimants will not be under-compensated, we feel that the government already has much evidence to demonstrate that in the real-world, claimants do not lose money from their investments. Any further delay would exacerbate the wider social impacts that a change to a negative rate value has already had."

The FCA has spent £1.4m on it Financial Lives Survey and report between 2015 and 2017. It has been reported that a Freedom of Information Request revealed that the FCA paid external organisations £131,772 in 2015/16 and £647,651 in 2016/17 to conduct the survey on it's behalf. The regulator also spent £13,247 on the production of the physical copy of the report, which included costs for typesetting and printing.

Marsh has announced that its combined Jelf and Bluefin business in the UK will, from early 2018, begin rebranding as Jelf.  With almost 3,000 colleagues serving over 250,000 clients from 80 locations, the new Jelf will be one of the UK’s leading insurance Brokers for mid-size and SME companies. The business will continue to be led by Phil Barton as CEO, reporting to Mark Weil, CEO of Marsh UK & Ireland. Marsh acquired Jelf Group plc in 2015 and Bluefin Insurance Group Limited in December 2016. Both firms share a rich heritage of being leading community Brokers with an extensive, complementary network of regional offices across the UK

In further news, Marsh's Global Insurance Market Index for the third quarter of 2017 has highlighted: the average global insurance rates have decreased for the 18th consecutive quarter, rates decreases have slowed down globally in the third quarter of this year across Property, Financial and Professional lines as well as rate movements varying by region, with a higher rate of average decrease in the US, Continental Europe and Latin America.

Zurich has launched a 'selfie' app called FaceQuote to encourage more people to think about and engage with their finances. The app guestimates a user's age before calculating how much life cover would cost per month based on the age suggested. A recent Zurich survey found that a quarter of people said they didn't have life or critical illness cover due to the expense and 30% said they didn't feel they needed it. The survey also asked those who participated in the survey how much they thought life insurance would cost for a healthy 40 year old, 14% thought more than £40, when in reality its just £8 (according to the app based on a protection plan with £100,000 cover for 10 years for an individual).

This week Aviva has announced a new group-wide policy to offer men and women equal parental leave. Aviva employees who are parents will be eligible for the same amount of paid and unpaid time off, regardless of their gender, sexual orientation or how they became a parent (birth, adoption or surrogacy). This part of Aviva's strategy to create a diverse and inclusive working culture in which barriers to career progression are removed.

In a recent Airmic article by Matthew Channon of Exeter University discussed how insurance regulations need to catch up with the drive less car revolution. He says that current relevant regulation is not focused to around one specific instrument, but is the product of a number of instruments, which are: the Insurance Act 2015, Consumer Insurance (Disclosure and Representations) Act 2012, Road Traffic Act 1988, Motor Insurers’ Bureau Agreements, Motor Insurance Directives and Automated and Electric Vehicles bill. Each instrument has specific, yet often unidentified effects on autonomous vehicles. For instance, the Insurance Act 2015 affects the exclusion clauses which can be utilised in any insurance contract, although they are vague and courts have not discussed the issue. Whilst the future of the EU motor Insurance Directives are in doubt due to Brexit. Channon calls for there to be significant adaptations and consultations to ensure that insurance is up-to-date with rapid technological developments. 

Allianz has announced that they have entered into share purchase agreements with shareholders representing 11.34% of Euler Hermes share capital on November 24 2017 for a price of 122 euros per share in cash, as a result of which Allianz will own 74.34% of Euler Hermes share capital and voting rights. Allianz intends to launch a simplified cash tender offer to acquire all outstanding Euler Hermes shares not already owned by Allianz and held by minority shareholders. The consideration for one Euler Hermes share will be 122 euros in cash. This constitutes a premium of 20.7% on Euler Hermes share closing price on 24 November 2017 and of 22.9%, 22.2% and 30.8% compared to three, six and twelve month volume weighted average Euler Hermes share price, according to Allianz.

Ascot Group Limited has announced the launch of a new reinsurance firm, Ascot Reinsurance Company Limited (Ascot Re). The firm has received US$1bn of funds and an "A" rating from AM Best. Ascot Group CEO, Andrew Brooks believed that the firm will be boosted by long-term capital through its ultimate owner, the Canada Pension Plan Investment Board.

Terrorism insurance has been a priority many firms this year due to the series of attacks across the UK and other parts of the world. For many, including the government, the responsibility for helping to stamp out the root cause is social media and tech companies. These companies have not turned their back on helping to combat terrorism and have in fact been making efforts to tackle the issue. For example, Twitter screens for terrorist content and reports 95% of accounts within hours as well as removing 99% of posts. Whilst Facebook, in addition to removing accounts and posts, they also notify authorities and YouTube have claimed to remove terrorist content before anyone is able to view it.

The insurance technology software firm, Open GI has announced three new partnerships with Brightside Group, Fresh and Right Choice. Their deal with Brightside is to support its plans to strengthen their presence in both commercial lines and niche markets.

Cyber Assist has announced that is has launched a wholesale Cyber product for the Broker market. The product will be available via the SchemeServe platform and is backed by A rated Lloyd's capacity. The policy covers most Cyber risks as well as e-theft, VOIP hacking, cloud coverage, terrorism and human error. According to the MGA, the online platform can allow Brokers to quote and bind cover quickly, only having to answer between four and six simple questions.

Worry+Peace are aiming to raise £150,000 in crowdfunding with the goal to hire more staff. The Insurtech Broker said that there was a need for more staff as they are overrun with existing clients.

This week at the Insurance Age Schemes Conference, Corporate Director at Ecclesiastical, Tony Fletcher has outlined how GDPR is a challenge but also an opportunity for Brokers. He said that Brokers must be innovative, understand their customer and grasp GDPR to succeed in the the schemes market. Some of the key challenges he mentioned were that Broker must overcome is competitive premiums as well as the saturated market. Fletcher also warned Brokers must examine their data management now in order to prepare for when GDPR arrives, ensuring that they have consent and the pipeline of the data they can use going forward.  



Market movers and shakers

Following the news of the launch of Ascot Reinsurance Limited, the firm has announced the appointment of John Berger as CEO, pending immigration approval and is due to take up his role in January 2018.

Brit Ltd has announced that Scott Brock has joined as President of Scion Underwriting Managers and will be responsible for building and managing the operations of the newly formed Scion.

AXA UK has appointed Scott Wheway as Chairman, succeeding Ian Brimecome, who is retiring from the post as well as his Non-Executive Director post.

Gallagher has announced the appointment of James Anderson as Group Managing Director of Rossborough, its personal and commercial lines broking business based in the Channel Islands and Isle of Man. James has been with Gallagher's 3 years and is currently MD of Brand Partners, part of Gallagher’s UK Small Business & Personal Lines division.

The digital-first Broker, Digital Risks has appointed Peter Barrett as its Chairman, as part of its ambition to scale in the UK and internationally.

AFL Insurance Brokers Ltd has announced the appointment of George Stagg as Associate Director, Innovation to lead its Incubator division.

CDL has appointed Rob Truman as Head of Technology to drive collaboration, governance and innovation as the company continues to expand its InsurTechX portfolio and insurance retail technologies.

The Plan Group, the brokerage who operates under commercial motor brand Plan Insurance Brokers, has appointed Grant Georgiades as its new Managing Director

All information provided in this Market Digest has been gathered from multiple Insurance Media sources and individual company press releases.

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