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General Insurance Newsletter - Friday 22nd December 2017

22 Dec 2017

Market News

Sian Fisher, CEO of the CII has considered the key issues facing the insurance sector in 2018. Fisher stated that uncertainty around government decision making will continue for the next 12 months, which will increase the chances of sharp changes in direction in the future - similar to what we have seen with the discount rate, where the government is reversing it's decision and costing Insurers hundreds of millions of pounds. Uncertainty surrounding Brexit is another key issue facing the sector, as although recent agreements over the Irish border suggest the UK may remain within the Single Market after its leave the EU, there is still the mantra 'nothing is agreed until everything is agreed' depending on how negotiations progress. Fisher also discussed learning lessons from the series of catastrophic and terrorist events from the past year as well as being prepared for global breaches of data security.

In further news, the (CII)’s Faculties in Underwriting, Claims, Broking, Life & Pensions and Learning & Development will be evolved and relaunched as individual professional Societies as part of a wider engagement strategy. Last year the CII set out on a new and ambitious change programme – outlined in its Strategic Manifesto - with a renewed focus on public trust and modernisation of the organisation. A key part of the strategy involved building on the CII’s engagement with its members, Government, regulators and the public. With input from members and a renewed commitment by the Executive Team and Board, the CII will commit to progressing the development of Faculties into Societies using the template of the Personal Finance Society and Society of Mortgage Professionals which represent a significant number of the Institutes 125,000 membership. This will involve greater integration with the CII infrastructure resulting in the current Director of Faculties, Ant Gould leaving the CII in the New Year.

A number of representative bodies and Lloyd’s have welcomed the announcement by the Bank of England that it will allow EU banks and Insurers to operate normally in the UK post-Brexit and is undertaking a review of its authorising and supervision policies for international firms. In a statement, the bank said: “The foundation of the Bank of England’s approach is the presumption that there will continue to be a high degree of supervisory cooperation between the UK and the EU. On this basis, EEA banks and Insurers may (if they are not conducting material retail business) apply for authorisation to operate as a branch in the UK. There are expected to be no implications of the proposed policy for the current operations of banks and Insurers from non-EEA countries such as the US, Switzerland and Japan.” 

The European Commission has proposed pushing back the application date of the insurance distribution directive (IDD) to 1 October 2018. However it highlighted that EU countries were still required to bring IDD into national law by the original date, 23 February 2018. The Commission added that the European Parliament and the Council will need to agree on the new application date “in an accelerated legislative procedure”.

The insurance sector will miss the General Data Protection Regulation (GDPR) compliance deadline in 2018, according to international law firm Clyde & Co. “Whilst some companies within the insurance sector have made good progress towards GDPR compliance, we know that there are large parts of the industry that have not made adequate plans for compliance with the new regulation by May 2018,” said Mark Williamson, a London-based partner at the firm. The prediction is Clyde & Co’s “most confident” of the year, one of a wider set of forecasts for the global insurance industry in 2018. Other predictions include an increase in regulatory scrutiny of Insurers’ use of algorithms and a heightened focus on how insurtech itself is best regulated. Despite the fact that “many businesses within the insurance sector” will miss the May deadline, it is never too late to start a GDPR compliance project, according to Williamson.

Global Risk Partners (GRP) has joined the list of the top 20 largest Brokers in the UK, following a transformational year, which has seen 12 acquisitions. This year, GWP increased to £550m up from £400m in 2016 and run rate income was £76m, up from £45m last year. A ‘war chest’ of £200m has been earmarked for further acquisitions, secured from Ares Capital Europe and HSBC. That, alongside a “very strong pipeline,” means GRP is on track to reach its £1bn GWP target, according to CEO David Margrett.

A-Plan has revealed a 12% rise in turnover for 2016/17. The Broker said that the progress was achieved through "targeted investment in marketing, new branches and the ongoing development" of specialty centre as well as new business expanding across all products and strong retention rates.

Private school fee payments from parents are currently one of the top targets for cyber criminals, especially with invoices for next term being issued over the current weeks, warns Cyber Decider. Schools generally and private school fee payments particularly, are currently popular with cyber criminals because of the combination of them being large (generally £4,000-£10,000 per term) and poor cyber security at many schools makes for an easy target for hackers. 

JM Glendinning has opened a new branch in Birmingham. The new branch specialises in Real Estate insurance and will provide a "boutique services for Developers, Investors and Contractors". The Broker also announced that it has hired Chris Hitch to lead the new office.

Clark Thomson has reported a 12.4% increase in turnover to £11.18m for the year ending 31 March 2017. According to results filed at Companies House, the roker also achieved a significant rise in Ebitda to £1.53m (2016: £1.05m). According to the Managing Director Ben Bailey, the Broker has been focused on new business and has seen growth in all classes within the SME to mid-market sector across all its branches.

It has been confirmed that the new multi-class and multi-territory international managing general agent (MGA) platform Volante Global, is set to launch with a UK commercial Motor team trading during the first quarter of 2018. The group listed that it was establishing an international network of underwriting teams to deliver local market service with a global perspective, culture and ethos. The company detailed that the UK-headquartered global underwriting MGA will ultimately underwrite specialist portfolios of insurance and reinsurance business, including: Property and Casualty, Professional and Financial lines, Motor, Space & Aviation and Marine & Energy.

Travelers Europe has revealed it has chosen Dublin as its post-Brexit hub. The provider stated that it will apply to the Central Bank of Ireland for authorisation of a new, wholly owned insurance subsidiary incorporated in the Republic of Ireland. Travelers the new subsidiary will enable it to “continue to seamlessly serve” its customers and broking partners in Ireland and across Europe when the UK exits the European Union, as currently planned in March 2019.

Allianz welcomes Brokers to it’s new Commercial office in Southampton. The move will not only offer Brokers new facilities, it will also enable all Broker facing business to be conducted on one floor, allowing staff to have closer collaboration across teams.

Market movers and shakers

The Institute of Risk Managementhas made three new Board appointments. These senior figures from global business will add to the strategic leadership of the organisation. The appointments are: Rahat Latif, Head of Enterprise Risk Management Division, Qatar Gas; Dr Maria Papadaki, Managing Director, The Dubai Centre for Risk and Innovation Management; and Ray Flynn a specialist consultant in risk management, specifically anti-bribery and corruption.

Allianz Group’s specialist corporate Insurer Allianz Global Corporate & Specialty SE (AGCS) has announced changes to its Board of Management, which take effect in 2018. From July 1 2018, Chief Operating Officer Sinéad Browne moves to a new Board-level role at AGCS, taking over from Chief Regions and Markets Officer, Carsten Scheffel, who retires from his role at the end of June. Bettina Dietsche, will join AGCS on April 1 2018 to succeed Browne as COO, subject to approvals of the regulator and the Supervisory Board.

Following the announcement of the launch of  Mercia Underwriting in January 2018, the MGA has confirmed three new recruits. Mike Hemmingwill join the business as Lead Underwriter, whilst Mal Collins will join as Development Underwriter and Anna Toon will join as Administrator.

Endeavour Insurance Services, Delegated Authority Specialist and Lloyd’s Broker, has announced the appointment of Chris Giles as Non-Executive Chairman. 

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

Merry Christmas and a Happy New Year from the General Insurance Team. 

We will be back in the New Year with your weekly General Insurance Digest!

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