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General Insurance Newsletter Friday 21st June 2019

21 Jun 2019

Insurance News

In 2017 Compre snapped up the respective shares of AG Insurance SA, AXA Insurance Ltd and Swiss Re International SE in the Gibbon pools. Now the independent (re)insurance legacy specialist has dived deeper into the pools by way of further acquisitions. This time around Compre has made deals with Basler Versicherung AG (Baloise), Helvetia Swiss Insurance Company Ltd and an undisclosed European insurance group. The Gibbon pools comprise insurance and reinsurance business in run-off underwritten by RW Gibbon (Underwriting Agencies) Ltd and RW Gibbon & Son Ltd between 1950 and 1972.

“It was all completely avoidable. It should never have happened.” Those were the words of Grenfell Tower fire survivor Marcio Gomes – whose stillborn son was the youngest fatality in the 2017 tragedy in the UK – when it was announced that a wrongful death lawsuit has been filed against US companies, including the manufacturer of the residential building’s combustible cladding. Filed on behalf of 69 of the people who died, as well as several others who were injured, the 143-count wrongful death and products liability complaint is demanding a jury trial in Philadelphia County against Arconic Inc and two related corporations for the Reynobond polyethylene cladding panels; Celotex Corporation for Celotex insulation; and Whirlpool Corporation for the Hotpoint brand fridge-freezer, a unit of which was previously cited as the origin of the blaze.

The frequency and severity of warranty and indemnity (W&I) claims have increased, according to new data from AIG. Claims-notification frequency has shot up by 26% for deals between US$400 million and US$1 billion, while holding steady at 20% across the wider portfolio, according to the fourth annual edition of AIG’s M&A Claims Intelligence Series. The largest and most complex deals are seeing the highest claims frequency, AIG said. The increasing frequency of claims is not confined to a specific region, but is a global trend – with claims notifications on the rise even in areas where they have historically been steady. However, claims notifications have been driven in large part by the Americas. Claims severity has also grown, with the most material claims (over US$10 million) nearly doubling from 8% to 15%, with an average cost of US$19 million, AIG reported.

“We are committed to ensuring consumers are not unfairly targeted and penalised for their loyalty and that they can access quality products and services for a price that is competitive and fair.” Those were the words of Business Secretary Greg Clark yesterday when the government confirmed that it will be consulting on giving new powers to the Competition and Markets Authority (CMA) that will allow it to decide whether consumer law has been breached without having to go through the courts. This could mean direct monetary penalties for those who overcharge the likes of loyal insurance policyholders. The proposal comes following the super-complaint lodged by Citizens Advice against what it called a systematic scam in the mobile, broadband, home insurance, mortgages and savings markets. In the view of Tony Tarquini, European insurance Director at Pegasystems, the proposed powers for the CMA will push insurance companies to up their game when it comes to enticing new customers. His advice? Offer a more curated policy instead of taking the price-driven route.

Aside from shelter, nearly all our other necessities face flood risk. That was one of the points brought to light by Environment Agency (EA) Chief Executive Sir James Bevan when he opened this year’s Flood and Coast Conference in Telford yesterday. In his speech, Bevan talked about “climate emergency,” the need for resilience and the EA’s proposed long-term plan for England. “I said ‘climate emergency’ because it is and because we all need to wake up,” asserted the CEO. “We need to wake up to the fact that the changing climate means we may not have enough water in this country in 20 years’ time – what I recently called the Jaws of Death. And we need to wake up to the growing danger that climate change poses in relation to flooding and coastal erosion.”

The UK underwriting business of French mutual insurance group Covéa has given its commercial lines proposition a boost. Covéa Insurance has rolled out an all-risks Commercial Combined product designed to be traded electronically either via Acturis or through the Insurer’s extranet site. The e-trade offering comes following last year’s launch of a business Combined insurance product. Features include modularity, which allows up to 15 optional sections of cover, as well as the addition of Cyber protection. For slightly more complex risks, Brokers are afforded a 60-minute referral response time plus the added support of a webchat facility.

Usually people don’t feel happy about having to deal with their insurance company or insurance broker. They’re either having to buy or renew a policy and therefore spending money, or claiming against a policy and have therefore had an unforeseen negative event happen in their lives. In most cases, people are not dealing with their insurance provider many times per year—engaging with their Insurer just once or twice and neither a particularly happy experience.So imagine, as an insurance company or Broker, having a client interacting with you approximately 30 times a month. And those 30 times are all positive interactions that leave the client feeling better about their insurance policy. This is the experience that many customers seem to be having with Neos, a new ‘smarter home insurance’ company built around the idea that alongside their insurance, customers receive insurtech that compliments their policy. Matt Poll, the Founder of Neos, said that because of the way the company works, they often get feel good stories from their customers that have nothing to do with insurance.

Para sports supporter Allianz is lending its name to the ninth edition of the World Para Swimming Championships. Taking place in September at the London Aquatics Centre, the week-long competition will be known as the London 2019 World Para Swimming Allianz Championships. A qualifier for the Tokyo 2020 Paralympic Games, the tournament will feature approximately 600 swimmers from 60 nations. “We’re proud to be partnering with this exciting event and wish all of the athletes involved the best of luck,” stated Allianz UK Chief Executive Jon Dye. “As a business we’re committed to promoting inclusion, diversity and excellence; a vision which is shared with the Paralympic movement.”

According to new research by Ecclesiastical, it seems health charities are those most dear to Brokers with just shy of a third – 30% - more likely to lend their support to a health cause than any other. Community charities and helping people with disabilities come next, both at 15%, followed by charities addressing poverty (10%) and supporting education (8%). The same research discovered that Brokers in the South East and South West are the most supportive of charitable organisations across the UK, while Brokers in the 46-55 year old age group are more likely to offer their support than their peers.

Specialist global Insurer Hiscox has announced the launch of its Cyber Exposure Calculator, which is designed to help businesses estimate the potential financial impact of a cyberattack. The calculator is part of a suite of educational products provided by the Hiscox CyberClear Centre. The calculator is free to use. Businesses can obtain estimates of their potential Cyber exposure by selecting the country and sector in which they operate and their revenue. The tool also provides insights into the types of cyberattacks businesses may face.

Insurance provider Markel has made the smart move of leveraging the growth of a thriving sector in the UK – rolling out a new proposition for start-ups as well as both emerging and established SME companies in the technology, IT and communications and medical technology space. “The UK’s technology sector is worth £184 billion and generates an annual GWP (gross written premium) of £150 million for the insurance industry,” stated Markel’s UK sales and Marketing Director Nic Brown during last week’s launch which saw more than 200 Brokers and industry practitioners in attendance.

The Financial Conduct Authority (FCA) has issued a warning regarding Delta Car Insurance. Based on information it has acquired, the regulator believes Delta has been offering financial services and products without authorisation, targeting customers in the UK. Delta has been conducting business over the phone and via its Instagram page. The company has been using the social network since October 2017, posting testimonials from supposed customers and encouraging users to bypass other providers. Despite the FCA’s warning, the Instagram page is still active and posting content for its 8,100 followers.

Judy Hadden has joined forces with James Hallam to launch and market the HomeSpill and WorkSpill insurance policies under the new trading name of Oil Spill Insurance Services. At a time when the world is keenly focused on environmental issues and protecting our planet’s natural resources, HomeSpill & WorkSpill are perfectly placed to play their small, but important part in making sure that businesses and homeowners alike have the resources and contacts they need to deal promptly with any spills that might occur. Oil spills from business and domestic properties are one of the major causes of water pollution in the UK and are keenly monitored by the Environment Agency and the water boards.

The Chartered Insurance Institute (CII) is looking for rising stars to join its talent programme: the New Generation Group. Comprising of 40 young people, the 2019-2020 group will be split into four subgroups: claims, underwriting, broking and the London Market.

In other news...Artificial intelligence (AI) currently being used by insurance companies has failed to remove gender bias from the profession’s claims, underwriting and marketing processes. A Chartered Insurance Institute (CII) report tells Insurers they must tackle these gender biases. The report found that the datasets used to train the algorithms which support AI systems are rooted in outdated gender concepts.

Navigator and General (N&G) has unveiled a new small craft policy with multiple new features. The product is for those who own small sailing boats, dinghies, motorboats and speedboats. It will cover these vessels when used inland and on coastal waters in Europe, up to 12 nautical miles offshore. N&G, which is owned by Zurich, stated that the new policy is designed to replace its existing sailing dinghy and small craft policies and customers covered by these policies will automatically have their cover updated, free of charge.

The Lloyd’s market must evolve and evolve fast or risk driving itself into irrelevance. This was the warning from Lloyd’s Chief Executive Mr John Neal as he addressed delegates at the 2019 MMC Rising Professionals’ Global Forum in London last week. “We’re facing quite challenging headwinds,” he said. “Our products simply aren’t keeping up with the changing landscape of risks and we’re not harnessing all of the new capital that’s knocking on the door.” He said the cost of doing business at Lloyd’s remained punitively high. “For every $100 the customer pays us, the best value they get back is $60. I can’t think of an industry outside of our own where that would be tolerated.”

It’s been a tough month for Lloyd’s of London Insurer Tokio Marine Kiln (TMK). Less than two weeks ago it was revealed that two TMK Executives had resigned following allegations of sexual harassment. Now, in an unrelated development, the Tokio Marine Group subsidiary announced that its UK insurance company Tokio Marine Kiln Insurance (TMKI) will no longer accept business starting July 01. Also placed into run-off are portfolios of UK Property, Liability, marine, and engineering risks currently underwritten through TMKI. Japanese accounts, meanwhile, will not be affected until January 01, 2020 when they will be underwritten by US-based sister firm Tokio Marine HCC. The move means TMK will be focusing on its Lloyd’s operations via Syndicates 510, 557, and 1880.

Former Broker and MP Craig Tracey has signalled his support for Boris Johnson, who is currently front-runner to become leader of the Conservative Party and Prime Minister. Tracey, MP for North Warwickshire & Bedworth and former Broker said: “When I looked at all of the candidates I just felt that he had the best experience, I think he’s obviously got experience in government, I think more important was that he also had the experience running London."

Specialist Motor Insurer ERS has announced that it has moved to a new office location in London. Their new office address is 21 Lombard Street, EC3V 9AH. A spokesperson for ERS commented, “we’re looking forward to meeting all our Brokers and business partners at our fabulous new location, so please come and see us soon.”

A brother and sister, along with their friend, have been sentenced for carrying out a ‘crash for cash’ scheme on a roundabout, the victim of which was a pregnant woman. The City of London Police’s Insurance Fraud Enforcement Department (IFED) led on the criminal investigation and on Monday 13 May 2019 at Birmingham Crown Court, all three of them pleaded guilty to one count of conspiracy to commit fraud by false representation. They were subsequently sentenced.

Millions of holidaymakers are unwittingly putting themselves at risk, because of confusion over Travel cover. A new study from Aviva finds that many customers aren’t sure when to buy, what to tell their Insurer, or what’s covered under their policies. The Insurer is therefore urging people to check their Travel insurance ahead of the summer holiday season.

The FCA has outlined its position on the Competition and Markets Authority (CMA) investigation into dual pricing following the government response to the study. In a statement published, the FCA explained that its priority was fair outcomes for all customers and that it was considering a regulatory approach to the issues raised. The regulator stated: “We have identified potentially harmful business practices that were also highlighted in the CMA’s work and we are tackling these through our supervision of firms.” The government is consulting on measures to tackle the loyalty penalty and combat dual pricing which could see companies fined by the Competition & Markets Authority (CMA) if they are found to be breaking the rules. The proposals would enable the CMA to issue fines without going through the courts – something it is currently required to do. In a letter to the CMA, Business Secretary Greg Clark reiterated that the loyalty penalty amounted to £4bn across five sectors each year. 

PIB Group’s turnover nearly doubled in 2018, to £106.8m from £59.7m in 2017. According to a document filed on Companies House, the business also posted a post-tax loss of £23.1m in 2018 (2017: £12.3m). However, PIB also reported that its Ebitdae profit had jumped to £15.1m in 2018 from £4.0m in the preceding year.

London-based InsurTech Broker Zego has raised $42m (£33.5m) in what it said was one of the largest funding rounds for a European start-up. The business explained that the money will be used to fund its expansion across Europe, as well as build on its current operations in the UK, Ireland and Spain. It also plans to double its workforce. The investment round was led by Target Global, an investment firm specialising in the Fintech and mobility space, with other backer including TransferWise founder Taavet Hinrikus.

Policy Expert has bought Motor insurance Broker Sure Thing! for an undisclosed sum, it can be revealed. As a result of the deal, Sure Thing! Chief Executive Officer Brendan Devine has left the business, along with Commercial Director Stevie Sutherland and Underwriting Director Kevin Kiernan. In its latest set of financial results, Sure Thing! posted a loss of £3.41m for the year to 31 March 2018, which followed losses in the three preceding years.

A jam-packed cricket tournament with no room for rescheduling prior to the semi-finals, plus one of the wettest months in the UK – indeed it isn’t the most ideal pairing and, if reports are to be believed, the ICC Cricket World Cup 2019 is looking to be costly for Insurers because of the downpours. So far four matches have been called off, which isn’t welcome news for broadcasters and advertisers as well as other businesses that could have been earning on those days but instead are left praying to the rain gods. However, at least they are consoled if they’re covered by cancellation insurance. As for the Insurers themselves, industry sources cited by Reuters are pointing to millions in potential payouts.

Market Movers and Shakers

London-based Richard Phelps is now an Enterprise Client Group Leader at Aon. The key arrival makes the switch from Barclays Investment Bank where he most recently served as Managing Director for senior relationship management. A former Olympic rower, Phelps also brings years of know-how from Kleinwort Benson.

AXA XL has snapped up former EY Associate Partner Christopher Read to serve as the division’s Chief Operating Officer for UK legal entities. Prior to his stint at the accounting firm, Read held the position of Chief Executive at AXA’s general insurance business in Hong Kong. Meanwhile existing colleagues Louise Piper and Harpreet Sanghera have been tapped as Client & Distribution Head and Strategy Director, respectively, in the UK. The appointed Executives will be under the leadership of UK legal entities CEO Paul Greensmith. As part of the UK client & country management team, the three will outline the proposed future set-up of AXA XL in Britain.

Ken Randall will no longer serve as Group Chief Executive at Randall & Quilter (R&Q). “Succession planning has been high on the board’s agenda and, with the continued development of R&Q’s business, it’s time to add further strength to our senior leadership team and for me to step back from day-to-day operations,” stated the R&Q boss when it was announced that he is leaving his current post. The non-life legacy insurance investor and capacity provider, however, revealed that Randall is taking on the role of Group Executive Chairman while the newly created positions of joint CEOs will be filled by familiar faces.

London-based Gareth Sutcliffe has made the switch from EY to Willis Towers Watson. Appointed as head of the broking giant’s insurance investment solutions group (IISG), Sutcliffe brings more than 17 years of industry experience to the role. His previous remit involved advising Insurers on private market assets and optimising their investments’ capital efficiency.

Instead of a payout deal from Old Mutual Limited (OML), previously suspended Chief Executive Peter Moyo has now got the axe. In an update to stakeholders, the African Insurer has lifted the lid on the sacking. The separation stemmed from a supposed conflict of interest involving investment firm NMT Capital, which Moyo founded and concerns over declarations of ordinary dividends.

Premium Credit has announced key appointments to its executive team. Owen Thomas, former Sales and Distribution Director at RSA, will join the company in June. Jon Howells, Commercial Director at Close Brothers Premium Finance, is due to follow him in September.

SSP Limited has announced that Adrian Brown will be joining the company as Non-Executive Director. Adrian has more than 30 years’ experience in senior roles in leading underwriting and distribution businesses including as Group COO of Ardonagh Group, UK CEO of RSA and Managing Director at MoreThan. Jonathan Halford, SSP Chairman, said “We’re delighted to have Adrian join us. His exceptional depth and breadth of experience of the General Insurance industry will provide powerful insight into the opportunities and challenges in the industry, contributing to the ongoing development of SSP’s strategy and plans for the future.”

Nexus Group has hired Marc van der Veer as CEO of European ventures. He joins Nexus from the Ardonagh Group, where he was CEO of international for specialty MGA Geo Underwriting. He joined Geo in 2017 following its rebrand from Towergate Underwriting. In his new role, van der Veer will report to Nexus Group CEO Colin Thompson. His main focus at Nexus will be on pursuing a buy and build strategy for an identified pipeline of niche European specialty MGAs.

Aspen Insurance Holdings Limited announced that Joshua Brekenfeld has been appointed as Director of Global Corporate Development. Josh joins Aspen from Lloyd’s of London where he spent six years in senior roles, most recently leading the business oversight relationship between Lloyd’s and ten companies operating in the Lloyd’s market. He has also held roles in the U.S. Senate and, in 2018, was named a leading role model in the insurance industry and one of the Top 50 LGBT Future Leaders by the Financial Times.

Insurtech Inshur, which raised $7m in February, has announced four key appointments to help protect its customers from insurance fraud, in a bid to help keep premiums down. The four hires are Mike Connolly as Head of Counter Fraud, Peter Truong as Senior Business Intelligence Developer, Milan Chavda as Head of Pricing and John King as Head of Product.

As part of its succession planning process and to reflect its continuing growth, QuestGates has announced promotions within three of its divisions. Nikki Sutton becomes Associate Director – Head of Private Clients and Frank McGaffney becomes Associate Director – Head of Agriculture and Forestry whilst Dean Ciaburro and Paul Bullett become Major Loss Directors reporting to the Head of Major and Complex Loss, Mike Ledgerton.

Two new appointments have been made to the board of the London and International Insurance Brokers’ Association (LIIBA). James Masterton, Chief Executive Officer of Price Forbes and Partners and David Pexton, Chief Executive Officer of Lonmar Global Risks, take up their seats with immediate effect.

Broking stalwart Tim Scoble has made the switch to Marsh. Appointed as Chief Executive of Marsh’s UK real estate practice, the three-decade industry veteran brings experience from both Willis Towers Watson and Aon. At the latter, Scoble most recently served as UK Real Estate Practice Head while at WTW he was a Leadership Partner within the Property investors division. In his new role, which he will assume later this year, the CEO will have overall responsibility for the development of strategic solutions for clients. The UK real estate practice is part of Marsh JLT Specialty and provides insurance and risk advisory services to real estate owners, operators, managers, and developers.

 

 

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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