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General Insurance Newsletter Friday 24th July 2020

24 Jul 2020

Insurers paid out $30+ billion due to natural catastrophes in the first six months of the year. Aon has launched its Global Catastrophe Recap: First Half of 2020 report, which evaluates the impact of natural disaster events that occurred worldwide in the first six months of the year. Published by Impact Forecasting, Aon's catastrophe model development team, the report reveals that global natural disaster events during 1H 2020 caused total economic losses estimated at USD75 billion – 23 percent lower than the 2000-2019 average of USD98 billion. Meanwhile, insured losses were estimated at USD30 billion – eight percent higher than the 20-year average of USD28 billion. These totals are preliminary and will change as losses continue to develop.

Swiss Re Group’s sale of UK closed book consolidator ReAssure Group Plc to European life and pensions business Phoenix Group Holdings Plc has crossed the finish line, and the new owner shares what’s ahead. According to Phoenix, ReAssure Ltd Chief Executive Matt Cuhls will be joining the group’s executive committee while retaining his CEO position. Cuhls has been with ReAssure and its predecessor firms since 2000, and was there when the company was acquired by Swiss Re more than one and a half decades ago.

Insurance marketplace Lloyd’s of London, which has to move certain policies to Brussels-based Lloyd’s Insurance Company S.A. (LIC) because of Brexit, has announced a delay in the process. Originally slated to be effective on October 29, the Part VII transfer of European Economic Area (EEA) policyholder business to LIC will instead come into effect on December 30. In an update, Lloyd’s said the sanctions hearing is now scheduled for November 18.

S&G Risk Solutions has bought Lloyd’s coverholder BLW Insurance Brokers for an undisclosed sum. BLW was founded in 1971 and according to S&G it trades with regional Brokers and direct clients, with capacity both in Lloyd’s and London composite markets. Brett Sainty and Mark Greenwood, owners of S&G, will lead the business after the completion of the deal, with David Wild remaining as Non-executive Chairman of BLW and as a consultant to the business.

On the second day of the Financial Conduct Authority’s Business Interruption test case, the regulator’s lawyers argued there are key issues with the Hurricane Katrina Orient Express judgment Insurers are expected to lean on during the case. Colin Edelman, counsel for the regulator, argued that reversing the Orient Express judgment would “restore sanity rather than creating mayhem and restore these policies to acting in a way an insured would expect them to operate”. The Orient Express case involved a hotel that closed for two months in 2005 after taking damage from Hurricane Katrina. The Insurer in the case, Generali, argued that applying a ‘but for’ test the hotel would have suffered from Business Interruption whether it was damaged or not, as the surrounding area was also devastated from the hurricane.

The Competition and Markets Authority (CMA) has propelled forward with a phase one merger inquiry into Ardonagh Group’s £26m deal to acquire motorcycle specialist Broker Bennetts. The launch comes following an initial investigation and call for comments about whether or not the deal would result in a “substantial lessening of competition”. At phase one, the CMA determines whether it believes that the merger results in a realistic prospect of a substantial lessening of competition. If so, the CMA has a duty to launch an in-depth assessment (phase two), although merging parties may offer to modify aspects of the transaction to ‘remedy’ any competition concerns identified.

The Chartered Insurance Institute has committed to making sure the diversity and inclusion policies that Chartered firms have in place are making a positive difference to the make-up of the profession. Last summer the Chartered Insurance Institute unveiled five actions it would take to ensure Corporate Chartered Status is modern relevant and diverse, and to ensure Chartered firms have a positive social impact and contribute to the development of the wider profession. One of the five actions saw the CII introduce a requirement for Chartered firms to have a diversity and inclusion policy from July 2019 onwards. More than 900 Chartered firms that seek to retain their Chartered status in 2020 have confirmed they will have a diversity and inclusion policy in place by the end of this year. To make sure these policies are delivering positive change for the profession and wider society, the CII has confirmed that from 2021, it will request examples of the impact the approaches are having on Chartered firms when they wish to renew their status.

The ability for data and analytics to bring about instrumental changes within the insurance industry is one which has come under increased scrutiny in recent years. As the role played by analytical and machine-learning models in enabling insurance companies to make “better, faster decisions” becomes more evident, the capacity for these solutions to accelerate innovation in the insurance sector has also been highlighted. At a recent webinar held by global software publisher Guidewire Software (Guidewire) on the subject of ‘Leading through Change with Analytics’, the Chief Innovation Officer for Guidewire, Paul Mang, noted that it is hardly controversial to state that analytics has been a key focus for the insurance industry in recent years. In the London market, he said, Lloyd’s is focusing on leveraging analytics services in its specialised marketplace while, in the US, the digital insurance platform Lemonade has recently gone public, with its value proposition partly built on the analytics platform it has just built.

QBE Insurance Group, which will be officially releasing its first half financial results in August, has published its expected numbers. In a July 22 update, the Sydney-headquartered global Insurer said it expects a net statutory loss after tax of approximately US$750 million for the period. According to QBE, the preliminary figure largely reflects the impact of the coronavirus pandemic, catastrophe experience and prior accident year claims development, as well as a US$125 million net investment loss due to extreme investment market volatility.     

Nearly half of employees have made mistakes that have had cybersecurity repercussions for themselves or their companies, according to a new report from email security firm Tessian. The report, The Psychology of Human Error, surveyed 1,000 workers in the US and 1,000 in the UK at the height of the COVID-19 outbreak in April. It found that 43% of workers admitted to having made mistakes that resulted in cybersecurity repercussions.

Genworth Financial has agreed to pay AXA millions of pounds to settle their English High Court dispute relating to liability for payment protection insurance (PPI) mis-selling losses. In December 2019, it was ruled that the Virginia-headquartered group was obligated to compensate AXA for losses it incurred from mis-selling complaints over PPI underwritten by two firms acquired by the French Insurer from Genworth half a decade ago. The policies, which Genworth said were mis-sold by a third-party distributor, were purchased by customers between 1970 and 2004.

One of the largest independently owned MGAs has set its sights on a new area of insurance with the launch of a division and a key hire. Optio Underwriting, which brings together Ascent Underwriting, Cove Programs and Bay Risk Services, has launched an Accident and Health division after bringing in Darren Delande.

Marine Insurer UK P&I Club is continuing to offer insights through its Lessons Learnt video series and this time it is shining the spotlight on leaks in the engine room. An animated video outlines a serious injury suffered while a suspected leak is checked from the main steam dump valve gasket in the engine room.

The 2017 Grenfell Tower fire, which not only claimed 72 lives but also exposed serious failings within the system of building and managing high-rise homes, has led the government to come up with what is described as the “landmark” Building Safety Bill. More than three years after the West London tragedy, the draft version of the Bill was published on July 20th to allow for consultation and scrutiny before the Bill’s official introduction to Parliament, and the UK insurance industry has been quick to sound off.

Efforts by London Market Insurers to combat forced labour and modern slavery have been backed by the International Underwriting Association. The trade body has supported the development of market clauses that aim to eliminate the practice of using workers employed against their will under threat of punishment. The Joint Cargo Committee, made up of representatives from IUA member companies and Lloyd’s, has published a clause stating that claims payments are conditional on policyholders having undertaken due diligence on legislation relating to prohibited labour.

As it looks to expand its offering to clients, Shrewsbury-based insurance brokerage 1St Choice Insurance has introduced a new website. According to the Broker, the website boasts an update in design and functionality, and will be able to accommodate more products as the firm grows.

As the battle against insurance fraud rages on, insurance law firm BLM believes it may have a vital new weapon to help win the war. The firm is introducing what it describes as a “game-changing” tool, known as Fraud Edge. It gives greater levels of insight on fraudulent activity to help the user form their claim investigation strategy.

Insurtech start-up Coverly has confirmed it is closing down and is no longer offering small business insurance. In a statement on its website, Coverly noted that existing policyholders are still covered. Coverly was launched in 2019 by Managing Director Jodi Cartwright, who had previously held a number of executive roles in the insurance industry, including at Aviva and Brokerbility.

Thomas Carroll Group has reported rising profits for the year ended 31 December 2019. According to a filing on Companies House the broker’s pre-tax profit increased to £1.7m in 2019, up from £1.3m in 2018. In addition, gross profit was £10.8m in 2019 (2018: £10.1m) and turnover also ticked up to £11.2m, compared to £10.4m in the preceding year. The insurance broking division saw a rise in turnover to £8.9m, compared to £8.1m in 2018. Meanwhile, administrative expenses also increased to £9.1m in 2019 from £8.7m in 2018. The average number of employees at the group also increased, from 122 in 2018 to 128 in 2019.  

PIB Group has reported a 15% rise in revenue to £123.3m for the full year 2019, up from £106.8m in the preceding year. The business also made a loss for the year of £7.8m, an improvement on the £17.5m loss reported in 2018, according to a document filed on Companies House. PIB further posted a pre-tax loss for 2019 of £12.2m, compared to £18.8m in the preceding year. However, its adjusted Ebitda increased by 50% to £26.7m in 2019 (2018: £17.7m). The business noted that it controlled gross written premium of £986m at the end of 2019. The average number of employees also increased to 1,202 in 2019, up from 1,104 in 2018.

Castel Underwriting Europe B.V. (Castel Europe), a subsidiary of Castel Underwriting Agencies Limited, has announced that it has entered into an agreement with The Hartford to acquire the renewal rights for Navigators Europe, the trading name of Bracht, Deckers & Mackelbert NV (BDM)/ASCO Continentale Verzkeringen NV (ASCO), Rotterdam Marine business. The renewal rights include a book of predominantly Dutch Marine Cargo, Inland Hull, land-based equipment and Liability business. The Navigators Europe Marine underwriting team, based in Rotterdam, will transfer to Castel Europe and will continue to be led by Duco Teijema as Marine Manager, Netherlands. Teijema will report to Gert van Middelkoop, head of Castel’s Marine Centre of Excellence.

Athene Holding Ltd subsidiary Athene Life Re Ltd now owns an 11.1% economic interest in the US business of London-headquartered Prudential Plc. According to the Board of Directors of Prudential, Athene’s US$500 million (around £398 million) equity investment has been finalised – giving the “important investor” a 9.9% voting interest.

What will the future of financial services look like in a post-Brexit world? The London Market Group believes it may have the answer. The group has launched a paper which outlines an “ambitious approach” to free trade across financial services, using the UK-Switzerland trade discussions as a template.

International General Insurance Holdings (IGI) has announced that S&P Global Ratings has confirmed its financial strength ratings at A- with a stable outlook. The ratings apply to IGI’s subsidiaries, International General Insurance Co. Ltd. (Bermuda) and International General Insurance Company (UK) Ltd.

The email encryption market is expected to grow from US$3.4 billion this year to US$9.9 billion by 2025, at a compound annual growth rate of 23.8%, according to a report by research firm MarketsandMarkets. The main factors driving the growth of the email encryption market are increasing instances of phishing and spam emails, strict industry regulations, compliance and a mandate to comply with data-protection directives, MarketsandMarkets said.

Aviva Plc, which three years ago announced the sale of its 100% shareholding in Friends Provident International Limited (FPIL) for £340 million, has completed the revised transaction – offloading 76% of its stake to International Financial Group Limited (IFGL) subsidiary RL360 Holding Company Limited. The finalised deal had a £259 million price tag, which is split between £209 million in cash and £50 million in deferred cash consideration.         

Specialist Insurer Ecclesiastical is celebrating a new milestone as it looks forward to moving to new offices. Construction work at the headquarters in Gloucester Business Park, in Brockworth, is now complete and the insurer has received a formal handover from site owner Arlington.

Just days after introducing a new MD, Guy Carpenter & Company, part of Marsh & McLennan, has more news to share. The company has announced the launch of Hybrid Solutions UK – a division of Guy Carpenter Fac – which will focus on developing semi-automatic facultative solutions. They will sit between traditional transactions and treaty programs, with the firm believing that their development will help it provide greater customisation opportunities for clients.

In the UK insurance industry, the name of Sam White is well-established – she is viewed by many as an industry pioneer and an Insurtech champion as the figure behind Pukka Insure and the CEO of Freedom Services Group. Now, she is taking her talents to Australia. White has formally announced the launch of Stella Insurance – a digital MGA that will focus on providing female-centric car insurance across the country. It will launch on the digital operating platform Aventus.





Coronavirus-related News

The legal test case brought by the Financial Conduct Authority against various Insurers started on 20th July in the High Court. The trail is set to take place over eight days, running from Monday 20th-23rd July 2020 and Monday 27th -30th July. The FCA case involves 60 Insurers, 700 different types of insurance policy wordings and an estimated 370,000 policyholders.

Lloyd’s has announced the creation and in principle approval* of its newest “syndicate in a box,” Syndicate 1796, set up to insure the storage and transportation of a Covid-19 vaccine, once developed, to emerging economies. The market said the initiative forms part of Lloyd’s response to the far-reaching impacts of the pandemic. Syndicate 1796 has been developed by Parsyl, an insurance technology company and Lloyd’s Lab alumni, in close partnership with Ascot as managing agent, and in cooperation with Axa XL, McGill and Partners and Gavi, the Vaccine Alliance.

Hiscox Action Group has attacked the way Hiscox has construed clauses and interpreted words in its submission to the court amid the Financial Conduct Authority business interruption test case. QC Ben Lynch, representing the Action Group which has been one of the loudest voices since the debate reared its head earlier this year, highlighted a number of examples in the fourth day of the test hearing.

Beazley has reported a pre-tax loss of $13.8m (£10.8m) for the first six months of 2020 (H1 2019: profit of $166.4m). The Provider also explained that impact from claims arising from Covid-19 had driven its combined operating ratio to 107%, compared to 100% in the first half of last year. Beazley estimated that its pandemic-related losses to amount to $170m net of reinsurance split between Political, Accident and Contingency ($70m) and Marine, Property and Reinsurance ($100m).

There is a new association aiming to urge governments worldwide to align their economic aid and COVID-19 recovery efforts, and it has formed a partnership with the Chartered Insurance Institute (CII). The CII will be working with the International Association for Sustainable Economy (IASE) to establish ESG qualifications. The CII will join its board and academic committee to help create content for the exams, which explore environmental, social and corporate governance. IASE has a presence in more than 25 countries and is chaired by Javier Manzanares Allen, who holds the position of Deputy Executive Director of the Green Climate Fund.

Aviva has released its latest fraud report investigating fraud and scams relating to insurance, investments, pensions, and savings amid the COVID-19 crisis. Aviva's latest report found that one in five (22%) people in the UK, which equates to 11.7 million people, have received suspicious communications mentioning COVID-19. Nearly half (46%) of those who received suspicious emails, texts, or phone calls did not report the incident, with 41% admitting that they did not know where to report it.

Specialist Broker AllClear Insurance has launched a comprehensive Covid-19 Travel insurance package for older travellers. The product is underwritten by Mapfre and available to other Brokers through AllClear’s arrangement with the British Insurance Brokers’ Association (Biba).

Businesses had switched to a digital working environment when the country went on lockdown due to COVID-19. And now, consumers are confused about how working remotely during the lockdown could affect their Home insurance. Finder's latest data revealed that over two in five consumers (43%) claim that they did not communicate with their one insurance provider about working from home –  leaving them unsure and confused if their policy has been, or will be, affected by the new work setup.

Self-caterers from across the UK are calling out Insurers who are deducting the value of government grant money from payouts made to businesses on policies related to COVID-19. The #justpayit campaign has been launched by the Professional Association of Self Caterers UK (PASC UK), who represents small, family-run self-catering accommodation businesses and the Cottagesure Action Group (CAG).

The FCA has published a consultation paper on making changes to its rules following the extension to the deadline by which FCA solo-regulated firms need to have implemented the Certification Regime. In June, the Treasury announced that the deadline by which firms must have first assessed the fitness and propriety of their Certified Staff will be delayed until 31 March 2021. According to the watchdog, this delay will give firms, which have been significantly affected by the coronavirus pandemic, time to make the changes they need. 

New claims trends are starting to take shape, as we begin to recover from the effects of the COVID-19 pandemic. Prior to the crisis, the majority of claims for domestic properties had to do with escape of water, followed by burglary. As work-from-home and shelter-in-place orders swiftly moved into place across the UK, there was a significant change in claims activity, not just in volume but also type, from around mid-March. “As anticipated, we saw a sudden, significant downturn in escape of water claims. With more people at home, they could take immediate action to mitigate damage and potentially avoid a claim altogether or depreciate the value of that claim by up to 60%. There was also a significant downturn in burglary claims due to most properties being occupied,” said Russell Crewe, Managing Director, Property claims at Davies Group.





Effective immediately, Grant Maxwell will be appointed as Global Head of Alternative Risk Transfer at Allianz Global Corporate & Specialty (AGCS), reporting directly to AGCS SE Board Member and Chief Underwriting Officer Corporate Tony Buckle. Since February 2020 Maxwell has led the global Alternative Risk Transfer (ART) team on an interim basis. AGCS’ ART line of business provides structured (re)insurance solutions including fronting solutions tailored to companies’ specific needs.

Ki, a digital and algorithmically-driven Lloyd's of London syndicate launched in collaboration with Brit and Google Cloud, has appointed Dan Hearsum as its new Managing Director. Hearsum brings 20 years of experience in the insurance sector, including digital transformation. Before joining Ki, he led the UK Specialty Digital strategy at Marsh JLT Specialty and served as the Head of Replacement for the Specialty business in the UK. He also previously worked with Willis and CE Health.

Berkshire Hathaway Specialty Insurance (BHSI) has added Manchester to its roster of locations as the Boston-based insurance behemoth continues its British expansion. Coinciding with the office launch is the appointment of three national product line leaders – UK National Property Manager Irfan Esa, UK National Casualty Manager Gemma McKenzie, and UK National Executive & Professional Lines Manager James Burke. Esa brings more than 17 years of experience in technical Property underwriting; McKenzie, over two decades of Casualty underwriting expertise; and Burke, 16 years of Financial Lines know-how.

In further news...Berkshire Hathaway Specialty Insurance (BHSI) has bolstered its ranks with a swoop for a former Chubb and Allianz leader. The company has brought in Dr Frank Amandi as Head of Financial Institutions for Executive and Professional lines in Germany.

Atec Group has appointed former Kwik Fit and Sure Thing! boss Brendan Devine as Chief Executive Officer. He replaces John Bibby, who has stepped down from the business but remains a shareholder. The business, which trades under the brands of Ceta Insurance, Arkel Underwriting and InsureMy, said the changes were subject to regulatory approval.

Chubb has announced the appointment of Tim Stapleton as Executive Vice President of Financial Lines for Overseas General Insurance, the company’s international general insurance business operating in 51 countries. In his new role, Stapleton will have executive oversight of Chubb’s management and Professional Liability businesses. He will report to Timothy O’Donnell, Vice President of Chubb Group and Division President for Commercial Property and Casualty, Overseas General Insurance.

Charles Taylor has announced the expansion of its Marine Technical Services team with the hiring of five Marine Surveyors and a Global Operations Manager. The company said that the appointments broaden its Marine Technical Services team’s US footprint and deepens its expertise in all areas of Marine surveying. John Poulson, Sean Murphy, Capt. Glenn Walker and Peter Poulson will join the company as Senior Marine Surveyors. Lillian Aquilia will join as Operations Manager. They will operate from Charles Taylor US locations in New York, Boston, Savannah and San Francisco. All five appointments are effective immediately. A Senior Technical Director will be joining the team in the UK effective July 31.

It may be his first days at Fidelis Insurance Holdings Limited, but it is certainly not the first in the insurance industry for David Turner. The company’s new Head of Claims has joined Fidelis after spending more than 30 years with Amlin Group, most recently as its Global Claims Director.

Reinsurance giant Swiss Re has introduced a new CEO – one who will take the lead for its digital insurance platform. Carlo Bewersdorf will take on the newly created role of leader of iptiQ from October 01 this year, reporting to group CEO Christian Mumenthaler. His arrival comes on the back of the disbandment of the life capital business unit and the establishment of iptiQ as a stand-alone division.

Tokio Marine Kiln is waving goodbye to one of its most highly regarded figures as Nick Sinfield heads into retirement – but it believes it has found an able replacement. Tobin Ryan takes the helm as the company’s new Head of Claims, having previously been Head of Property and Special Lines Claims at the firm. He is set to head-up a newly created claims executive team that consists of Laura Hollingsworth, Head of Claims Operations; Lee Bennett, Head of the newly formed Delegated Claims Team; Patrick Cannon, Head of Enterprise Risk and Casualty Claims; and Victoria Joslin, Head of Property, Marine and Aviation claims.

Arch Insurance UK has brought back Iain Blair as its Broker Relationship Development Manager – E-trade. Taking the role with immediate effect, he will be based in Colchester and will work with strategic and national brokers to support the development and enhancement of online products and platforms.

As it prepares to bring together Howden’s retail network and RKH’s reinsurance expertise as part of a merger in October, Howden Broking Group has announced the appointment of a new Chair. The role will be filled by Barnaby Rugge-Price, who will now help CEO Jose Manuel Gonzalez with the leadership of a consolidated management team.

Deputy Chief Executive Gérald Harlin, who was with the Total Group from 1979 before joining AXA in 1990, is finally going ahead with his delayed retirement. Turning 65 next month, Harlin was supposed to retire at the close of last year. But the Deputy CEO, who at the time was also the group’s Chief Financial Officer, was tapped to serve as Executive Chairman of AXA Investment Managers (AXA IM) from December 01, 2019.

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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