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General Insurance Newsletter Friday 23rd August 2019

23 Aug 2019

Insurance News

Brokers using the Fleet UK (FLUK) scheme with Zurich have been told that Zurich’s contract with the provider will cease at the end of the year. The scheme arrangement, provided to Brokers via Fleet UK which is part of THB Group, will now be operated in-house by Zurich. The collaboration provided select Brokers with exclusive access to a preferential scheme and was previously described as one of the longest running schemes of its kind in the UK market. The scheme offered a bespoke wording including wider any driver cover and enhanced brokerage. According to THB, Fleet UK provides Brokers with enhanced policy wording, superior Broker remuneration and full Fleet risk management support services from THB’s market in-house division, Cardinus Risk Management.

In further news...Zurich has introduced its new Engineering Technical Centre. The Zurich Engineering Technical Centre is a state of the art, multifunctional building covering a number of different bases. The new facility helps to provide material testing including failure investigation, training to clients and surveyors. The Technical Centre is UKAS accredited for both testing (ISO 17025) and inspection (ISO 17020).

Ardonagh Group is set to transfer advised commercial lines clients from Swinton Business to Towergate Insurance Brokers from 1 October 2019. The business confirmed that the move means that “some roles will be made redundant”, adding that some employees will transfer to Towergate offices. It is not yet known how many branches will close as a result of the move, but Swinton Business has seven offices across the UK, in Burnley, Burton-on-Trent, Dartford, Glasgow, Sheffield, Southampton and Telford. According to the company, Swinton Business will continue operating online and through non-advised lines. A consultation process is underway.

In further news...The Ardonagh Group has published its interim results for the first half of 2019 – and it has been hit by some big losses. On the positive side, it’s worth noting that total income, EBITDA (earnings before interest, tax, depreciation and amortisation), adjusted EBITDA and operating profit all went up. Ardonagh’s loss for the period, however, amounted to £44.5 million. The loss figure, as shown by the group’s 62-page financial statement seen by Insurance Business, represents an increase on the £32.8 million loss recorded in the first half of 2018. This was attributed to additional finance costs and a reduction in gains on disposal of businesses and associates, which offset the improvement in operating profit.

The Financial Services Compensation Scheme (FSCS) is to compensate Alpha Insurance latent defect premium insurance policyholders. The move follows the collapse of a proposed deal arranged by BCR Legal Group to provide replacement cover for Alpha’s 10-year latent defect/structural damage insurance policies. Since May 2018, when the Danish company Alpha Insurance was declared bankrupt, FSCS has worked with BCR, the FCA, the Alpha liquidator and the Danish Guarantee Fund to try and secure replacement cover for Alpha’s latent defect/structural damage insurance policies. These policies lapsed on 11 August 2018 in accordance with Danish law.

The estimated impact on Insurers from the discount rate change has so far reached over £160m. The general Insurers that have reported their interim results for the first half of 2019 have reported hits of varying sizes. The government revealed in July that the discount rate would be increased from -0.75% to -0.25% from 5 August. QBE has posted a $62m (£51.1m) hit from the change in the Ogden rate, while Admiral revealed a £33.3m impact in the first half of the year, with the expectation of the total hit to reach £50-60m by the end of 2019. RSA predicted its impact from Ogden will reach £15m, while LV expected £13m, Direct Line £15.9m and Hastings £8.4m. ERS did not provide a specific figure, but it noted that its profit fell from £5.6m in H1 2018 to £3.1m this year was a result of the Ogden change.

Fresh Insurance has reported a turnover of £27.4m for the 17 months ended 31 December 2018. The Broker also posted a profit before tax of £3.5m for the period, as well as an operating profit of £3.1m. Fresh was bought by Vantage Holdings in May 2018 and the broking firm has since extended its accounting period to align with Vantage’s, which means there are no like-for-like figures to compare. In the 12 months ended 31 July 2017, the business reported a turnover of £16.9m and a pre-tax profit of £2.9m. Its operating profit for 2017 was also £2.9m.

The latest Insurance Age Broker survey has revealed that 42% of Brokers remain concerned about the impact of consolidation on the market. Data from delegates who have already signed up to attend the event, which draws in more than a 1000 Brokers from around the UK each year, showed: 5% were very concerned, 21% were concerned and 16% were a little concerned. Just 13% were not worried at all with the remainder offering a neutral opinion. More data from the survey is set to be exclusively revealed at the event which takes place on 7 November at the Ricoh Arena in Coventry.

Avid Insurance Services, a specialist MGA, has sold a majority stake to Beech Tree Private Equity (BTPE). According to a statement, Avid Managing Director Stephen Gibson will continue to run the business with Commercial Director John Inwood. Inwood said the investment from BTPE will give Avid the firepower to “accelerate our growth and build on the investment we’ve made during the past year in both people and systems.”

A claim for heart problems in the US cost £241,000, £200,000 to treat a brain haemorrhage in China, £153,000 to treat a fractured arm in San Francisco and £89,000 following a heart attack in Turkey. Yet amazingly one in five Britons still travel overseas without Travel insurance despite the average cost of a Travel insurance policy just £38. Travel Insurers are now dealing with the equivalent of one new claim every three minutes from UK travellers needing emergency medical treatment while overseas, with the medical bill at its highest for eight years according to analysis from the Association of British Insurers (ABI).

New research from Marsh, has found that Warranty and Indemnity (W&I) claims notifications across Europe, the Middle East and Africa (EMEA) have increased significantly since 2016. Rising claims notifications – up 293% from 2016 to 2018 – correlate with increasing demand for W&I insurance by buyers and sellers to protect deals. Marsh’s Transactional Risk Insurance Claims Study draws on Marsh JLT Specialty’s claims data between 2009 and 2019 and details 175 loss notifications across 24 countries in EMEA. It charts the growth of W&I insurance over the last decade and claims notifications as a proportion of policies placed during this period.

Insurtech ThingCo has introduced its latest offering, which it said is now being tested by unnamed Motor Insurers. Little Theo is a compact self-installed telematics device which features intelligent voice and crash detection. Solar-powered, Little Theo can run on a full charge for 50,000km per year. All data gathered by the wireless device, which sticks securely to any vehicle’s windscreen, is relayed to the Theo app. “Little Theo is little brother to Big Theo which is our direct to consumer proposition,” said Chief Executive Mike Brockman. “It’s our solution to the costs associated with blackboxes and the data quality, battery and safety issues associated with smartphone telematics apps."

Beazley Plc has published its latest UK gender pay gap report and Chief Executive Andrew Horton is encouraged with the results. Based on hourly rates of pay as of the snapshot date of April 05, here are the specialist Insurer’s gender pay gap figures in the UK: Mean – 32.1% and Median – 32.5%. Meanwhile, bonuses paid in the 12 months to April 05 translated to a mean bonus gap of 72% while median bonus gap stood at 43.8%.

The finance and resources committee of the City of Edinburgh Council met recently to discuss, among other things, the award of contract for the insurance coverage of Edinburgh’s tram extension project. Council documents showed that the £1.3 million insurance package consists of three policies – Construction ‘All Risks’ with coverage for existing structures and advanced Business Interruption including Terrorism for £605,937; third-party Liability insurance worth £644,000; and additional excess layer of the Liability coverage at £84,000. According to the committee’s report, one tender was received for the first two covers. The provider was identified as QBE Insurance (Europe) Ltd.

London-based Pembroke Managing Agency Limited, including its Lloyd’s platform, as well as Irish carrier Ironshore Europe DAC are now owned by Hamilton Insurance Group. The acquisition from US enterprise Liberty Mutual has been completed, five months on from the definitive agreement signing in March.

Half a million 1st Central policyholders will soon have access to breakdown cover from the RAC. In a joint announcement, the breakdown cover supplier and Car insurance provider said they have teamed up to incorporate the RAC’s proposition into 1st Central Plus and 1st Central Premier offerings. The insurance add-on will be made available to 500,000 1st Central customers starting September 12.

Bravo Group, owner of Broker Network and Compass, spent a total of £53m on acquisitions in 2018. According to the business’ financial results for 2018, the group bought 10 Brokers during the year in order to build on its “regional powerhouse” structure. In 2017, Bravo made deals for a total of £42m. Simon Drew, Chief Financial Officer at Bravo, said that the business “had a good run of it last year”, but added that the firm’s model was about buying the right businesses rather than spending a certain amount.

Call Connection’s joint administrators have confirmed that the firm’s administration period has been extended until 12 July 2020. The Ipswich-based Broker lead generator went into liquidation in July 2017 and this is the second time the administration period has been extended. In the latest administrator’s report, filed to Companies House on 19 August, joint administrators Martha Thompson and Colin Haig of accountancy firm BDO, stated that distributions are still due to be paid to creditors.

Accredited Europe has agreed a new program underwriting partnership with Sophro MGA, a UK Managing General Agent providing After the Event insurance. The provider has also extended its program underwriting partnership with UK MGA, First Underwriting to provide Household insurance. Accredited Europe explained that First already underwrites a Motor binder on the Accredited platform.

Global Risk Partners (GRP) Retail Division has bought risk management specialist Health and Safety Click (H&S Click) for an undisclosed sum. H&S Click is based in Benfleet, Essex and provides SME businesses with an online enterprise risk management, compliance and training solution. This follows GRP’s recent deal to buy Lancashire-based Broker 3XD. GRP’s Group Managing Director, Mike Bruce, stated that H&S Click will add significant value to GRP’s broking and MGA clients. In July, Bruce said that GRP had a number of deals in the pipeline, but added that it was not about putting flags in the map.   

Bedford Girls’ School music teacher Lesley Brazel has emerged victorious in her legal battle against Harpur Trust, in a pay dispute that started out as an employment tribunal claim but went all the way up to the England and Wales Court of Appeal. The case centred on the holiday pay of Brazel, whose employment is based on a zero-hours contract – meaning that while she is permanently employed, her contract provides no fixed hours of work. She put forward the claim alleging unlawful wage deduction when her holiday pay was calculated by pro-rating entitlement based on the number of weeks worked in the holiday year.

Back in May HSBC Holdings Plc’s interest was in ramping up in Asia, particularly when it comes to the UK banking group’s insurance offerings. Now the lender is said to have its eyes on fellow British giant Aviva Plc, which is currently assessing the future of its Asian unit. “I am working with the board to refresh Aviva’s strategy and we have decided to review the strategic options for our Asian businesses,” revealed Chief Executive Maurice Tulloch earlier this month. “Aviva’s businesses in Asia have excellent growth and earnings potential and we are considering a range of options to help these businesses reach their potential.”

 

Market Movers and Shakers

Allianz Insurance has appointed Eibhlin Swan as SME Branch Manager and Stephen Taylor as Head of SME & Corporate Partner Distribution. Swan will be responsible for the Maidstone small business branch reporting into Taylor. Swan joined the Allianz graduate management scheme in 2012 and previously held the role of Corporate Partnerships Manager. According to the provider, as Head of SME & Corporate Partner Distribution, Taylor will have responsibility for both the Maidstone and Lancaster SME branches. Having joined Allianz in 2011, he most recently held the position of Regional Operations Manager in London, having previously taken on roles across technical and distribution.

Gauntlet Enterprise has announced that two Appointed Representatives (AR) have joined the network in Wales. The arrival of new members Martin Vingleman and Jessica Llewelyn marks the first time the network has had a presence in Wales.

Brightside Group has appointed Derek Henry as Managing Director of Broking, joining the business on 1 September. He will replace Russell Bence, who has left the Bristol-based Broker to pursue other interests. Bence first joined Brightside in April 2016 after leaving Markerstudy. Henry previously worked at Ardonagh Group, leading the business’s relationship with the insurance market, but left the consolidator in 2018 to set up his own advisory business. His CV also includes roles at the RAC, Capita Insurance Services and Junction.

Lockton has appointed Devin Beresheim to the role of Executive Vice-President of Lockton Specialty Practices. Beresheim succeeds Brian Kawamoto, who retired last year. In his new role, Beresheim will report to Lockton US President and Chief Operating Officer Peter Clune.

Global law firm Kennedys has appointed a lawyer specialising in insurance as the firm’s first Global Managing Partner. Suzanne Liversidge will work alongside Nick Thomas, who has been the firm’s senior partner for more than 20 years and was re-elected for a fifth term in 2017. Liversidge, who is the first female Global Managing Partner for a UK top-30 law firm, will work closely with Thomas on the strategic and operational management of Kennedys’ 37 offices, the firm said. She is a member of the firm’s Global Strategy, R&D and Innovations boards. She also leads Kennedys’ Women in Insurance Network.

The middle of September will see the departure of DARAG Group Chief Financial Officer James Halley and Group Chief Executive Tom Booth has nothing but nice words for his exiting colleague. “James Halley helped complete the investment by Aleph and Crestview into DARAG, which was a crucial milestone in the delivery of DARAG’s exciting expansion during the past year,” stated Booth. “James also built a finance team and brought in improved processes across the group which leave us very well equipped for the future."

Lloyd’s of London policyholder & third-party oversight head Paul Brady has been named as the new sponsor for the delegated authority workstream of the London Market Target Operating Model. According to the London Market Group, its appointment announcement coincides with the release of an upgraded version of Delegated Authority: Submission, Access and Transformation Solution (DA SATS). Based on user feedback, DA SATS has been improved to feature mid-term Broker changes as well as enhanced functionality and more efficient processes for renewal and contract creation.

Rachel Conran has been appointed Interim Chief Executive of RSA Luxembourg, subject to regulatory approval. Rachel joined RSA earlier this year as Chief Underwriting Officer of Global Risk Solutions (GRS). Prior to joining RSA, she served as Chief Underwriting Officer and CEO of SCOR’s Global Insurance Business; and CUO and Global Head of Property of Allianz Global Corporate and Specialty. Richard Turner, current CEO of RSA Luxembourg will leave RSA at the end of the year after 36 years of service. During this time he led RSA’s global Marine practice and helped establish its Global Speciality Lines business, which later became GRS.

 

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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IDEX Consulting are proud to have teamed up with the Insurance Times to bring you the latest news on salary movements and job prospects across the UK General Insurance sector.

Please follow this link to read the article and if you would like to download the full salary guide, its available here.

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