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General Insurance Newsletter Friday 26th April 2019

26 Apr 2019

Insurance News

A feedback statement examining the duty of care for the Financial Conduct Authority (FCA) has learned that the majority of respondents to a discussion paper published in July 2018 think that levels of harm to consumers are high and there needs to be changed to better protect them. As a result of the feedback the FCA received and its early analysis, it has identified options for change that are most likely to address potential deficiencies in consumer protection. 

Insurers are positive about the British Insurance Brokers’ Association’s (Biba) standardised terms of business agreement (Toba) despite slow take-up, according to Biba Chief Executive Steve White. Biba launched its standardised Toba template in July last year, stating that using it would save up to 80 hours of work as well as reducing bureaucracy and Broker queries, lowering costs, making disputes less frequent and increasing productivity. Brokers welcomed the move, noting it would reduce the administrative burden on them.

A sharp increase in the number and cost of Cyber attacks is the key finding in a study of more than 5,400 organisations across seven countries, commissioned by insurer, Hiscox. More than three out of five firms (61%) report one or more attacks in the past year, yet the proportion achieving top scores for their Cyber security readiness is marginally down year-on-year. The Hiscox Cyber Readiness Report 2019, surveyed a representative sample of private and public sector organisations in the US, UK, Belgium, France, Germany, Spain and the Netherlands.

Canopius AG (“Canopius”) has announced the signing of the definitive sale and purchase agreement that will see the merger of its Lloyd’s business with that of AmTrust at Lloyd’s, a division of AmTrust Financial, subject to regulatory approval.

Compared to its predecessor, 2018 may have seemed timid in terms of natural catastrophes. However last year became the fourth costliest year in insured losses, according to the Swiss Re Institute's latest sigma. The combined insured losses of 2017 and 2018 reached USD 219 billion, the highest ever for a consecutive two-year period.

The news recently has been full of people discussing the dreadful fire in the Notre-Dame de Paris in France. As of Wednesday 17th April a massive €1bn has been pledged and donated by companies and business tycoons alike, in order to help restore the 850 year old, UNESCO World Heritage Site. Furthermore, an international competition has been launched by the Prime Minister of France, Edouard Philippe to rebuild and construct the 93 meter spire that collapsed during the fire.

Pet Insurers paid out a record-breaking £785 million in 2018 to cover the unexpected costs of owning a pet, driven by a significant increase in average claim size. The rise is likely to be caused by ever-increasing veterinary costs, as the sophistication and cost of treatment rises. Figures published recently by the Association of British Insurers (ABI) reveal that, in 2018, more pets were covered than ever before – with nearly 4.3 million pets being protected.

Earlier this month the Financial Services Compensation Scheme revealed that it had secured about 165,000 alternative Motor and/or Pet insurance policies from new providers in order to replace Qudos’ Motor and Pet policies following the unrated provider’s collapse last year. Some policies have been replaced with cover by Trinity Lane Insurance Company and ETU Forsikring A/S, another Danish firm. Both providers are unrated. Managing Director of Primo Plc, Robin Foster-Taylor said he was shocked that further unrated capacity had been sourced to replace Qudos: “I fail to understand how it is that we are suggesting that two unrated Insurers are being used to replace Qudos."

The Chartered Institute for Securities & Investment (CISI) has warned the FCA that the rise in Professional Indemnity insurance is damaging SME members as honest firms are forced to shoulder the cost of the misconduct of others. The CISI has raised concerns with the FCA at the decision to increase the Financial Ombudsman Service’s (FOS) compensation limit from £150,000 to £350,000 from 1st April 2019, as it may have serious unintended consequences for its member SMEs. In a letter to the FCA CEO Andrew Bailey, CISI CEO Simon Culhane Chartered FCSI acknowledges the importance of ensuring adequate consumer protection. However, he points out that PI Insurers were already facing a hardening market, with the April FOS increase now only serving to harden the market further “by potentially reducing the number of insurance providers but also by increasing costs significantly to advisory firms. We are receiving reports that premiums are more than doubling,” he says.

Over 75% of insurance customers reveal they struggle to understand information provided by their Insurer, however only 13% would identify themselves as a vulnerable customer, according to new research from data analytics company Consumer Intelligence. Ian Hughes, CEO of Consumer Intelligence, stated “Financial services companies have a real challenge ahead. Recognising vulnerability is a key part of ensuring customers are treated fairly but identifying these customers is very difficult, especially when customers are unaware of their own vulnerability....we believe data analytics can play a big part in the identification of vulnerable customers, and we are currently examining ways to help Insurers achieve this.”

In related news....Research commissioned by GoCompare Car Insurance, revealed that 50% of drivers think it should be illegal for Insurers to reserve the best prices for new customers at the expense of loyal policyholders. It also found 61% of survey participants feel Insurers treat their existing customers less favourably by charging those who renew their cover, higher prices than new customers. The survey, which questioned 2,000 motorists, also learned that, at their last renewal, 62% of motorists allowed their car insurance to automatically renew.

Hyperion Insurance Group Limited has won a Queen’s Award for the third time, being recognised for outstanding continuous growth in international trade over the last six years. Hyperion previously won the prestigious award in 2012 and 2007. The award follows Hyperion’s strong 2018 financial results, with total revenue up 16% to £620 million.

2019 marks the 25th anniversary of Keychoice, SSP’s distribution group. Keychoice has come a long way since 1994 when it was launched at the Ra Group offices in Halesowen, in the West Midlands. Keychoice was set up to create pioneering, cost-effective solutions specifically to help insurance intermediaries. 25 years on they are still doing that, having built a nationwide network of members and creating a distribution business that offers significant potential for Brokers and Insurers alike. As the business celebrates its silver anniversary, Ageas UK’s Chief Customer Officer Ant Middle has said “Our longstanding relationship with Keychoice works because we both have a passion for providing great service.” Known at the time as Bishopsgate, Ageas UK was among the four original partners of the insurance distribution unit.

British Engineering Services (BES) has made its Engineering Inspection products available on the Acturis platform. The firm claimed it is the first to provide this type of offerings to the market through a software house and added that the move will enable Acturis users to quickly get an online quote for Engineering Inspection services. It further stated that Brokers will only need to enter information and record invoice data for the initial submission.

Covéa Insurance has revealed a fall in underwriting profit to £1.8m for 2018 (2017: £12.4m). The provider’s profit after tax also declined to £1.5m, compared to £24.1m in the preceding year and its combined operating ratio (COR) deteriorated to 99.7% (2017: 97.5%). According to Covéa the results were driven by flat personal lines premiums due to “extremely competitive” market conditions and strong inflationary claims trends, particularly in Motor.

Incubator managing general agent Vibe MGA Management (VibeMM) has been bought by US insurance and outsourcing specialist Pro Global Insurance Solutions. The deal represents the first move for the US firm into the UK market. Terms of the transaction, which remains subject to regulatory approvals, were not disclosed. Soros-backed VibeMM will be rebranded Pro MGA Solutions. It was launched in 2017 by Vibe UK Holdings, which also owns Lloyd’s MGA Vibe Syndicate Management (VibeSM), and launched five classes of business, including Cyber and New Technology, over the last 18 months. Danny Maleary, CEO of VibeMM said: “Pro offers an excellent platform and expertise that will help accelerate the business’s development while enhancing Pro’s overall proposition to their customers. This is a great opportunity and we are very much looking forward to joining the Pro team.”

HSB Engineering Insurance, part of Munich Re, has launched a broker online trading platform, HSB Fast Track. The specialist Engineering and Technology Insurer noted that Fast Track had been designed to provide Brokers with a quick and easy way to quote and bind Construction, Technology and Engineering-based insurance products. The platform will initially offer four HSB products: Annual Construction, Project Construction, Contractors’ Plant and Computer insurance and the provider explained that it planned to add more policies in the future.

The Blockchain Insurance Industry Initiative – ‘B3i’ – of which Zurich is a founding member, has been exploring the potential of blockchain since its formation in 2016. B3i is now incorporated as its own separate legal entity, owned by 16 shareholders from across the insurance industry. Blockchain technology refers to a virtually incorruptible distributed database, used to maintain a continuously expanding list of records or transactions – otherwise referred to as blocks. Antony Elliott, Group Head of Business Transformation at Zurich and Chairman of the Board of B3i, says: “We realise that Zurich can’t transform the insurance industry on its own, and the distributed ledger that blockchain represents is only really useful if it is fully distributed across the industry, including customers, Brokers, Insurers, Reinsurers, and capital markets.

Prudential Retirement is assuming the longevity risks of approximately 16,000 pensioners in the UK as part of previously undisclosed and now completed longevity reinsurance contracts worth $2.6 billion. In an announcement, the Prudential Financial unit explained: “This early 2019 de-risking wave has been driven in part by many pensions seeking to close agreements prior to the original March 29 Brexit deadline. But with the Brexit deadline extended until late October, pensions that have not yet transacted have an unexpected window to move forward and de-risk.”

Legal & General Group Plc has forayed into what is described as the attractive and fast-growing pension risk transfer (PRT) market in Canada. An announcement by the UK-headquartered Insurer said it has agreed its first Canadian PRT transaction, which is being written by Ontario-based life Insurer Brookfield Annuity Company and Legal & General Reinsurance. The latter will provide quota-share reinsurance for such transfers in Canada, whose PRT market has more than doubled in size over the last five years.

Earlier this year PIB Group’s specialist managing general agents aQmen Underwriting Services, TFP Schemes and Thistle Underwriting Services merged to form Q Underwriting Services Ltd. This consolidated underwriting division now also includes the recently launched unit Q Property Underwriting Services. At the helm of it all is Q Underwriting Chief Executive Bernard Mageean who says “It’s an exciting time to be involved”. He states "We want Q to be a successful underwriting business. We will deliver a simple and efficient service to Brokers while keeping firmly in mind that we need to deliver a profit to our insurer partners. If we get those two things right, then we will build a long-term successful business."

Marlboro maker Philip Morris has launched a Life insurance subsidiary in the UK - Reviti. The new player offers insurance premium cuts, including a 50% reduction for policyholders who stop smoking for at least a year. Two other options are available under the new Life insurance proposition: price reductions in the cost of coverage can still be had if customers make changes in the way they smoke. According to CNBC, switching to electronic cigarettes will translate to a 2.5% discount, while specifically using IQOS – Philip Morris’ tobacco heating system – for a period of three months will mean a 25% cut. “They have zero credibility in claiming that they are committed to helping smokers quit and want a smoke-free future.” This was the strong assertion made by Campaign for Tobacco-Free Kids President Matthew Myers. In the anti-tobacco organisation’s view, the move is nothing but a “cynical distraction” from the fact that Philip Morris is primarily in the business of marketing cigarettes. In a statement, Myers noted that the multinational manufacturer sells more than 700 billion cigarettes annually.

This year it’s the turn of YoungMinds to benefit from AXA’s charitable initiatives. The mental health advocate, which became the Insurer’s new charity partner in the UK effective in April following a vote by employees, will be the beneficiary of AXA Charity Cycle 2019 – the fifth edition of the cycling event happening on July 19. A JustGiving page for the charity bike ride is now up, with a £5,000 fundraising target. Participating AXA staff will cycle from Weybridge to Tunbridge Wells and back.

Randall & Quilter (R&Q) has stated “he transaction is expected to close shortly” after finally receiving regulatory approval for its swoop for GLOBAL U.S. Holdings Incorporated. The Bermuda-based group’s wholly owned subsidiary Randall & Quilter America Holdings Inc. can now complete the $80.5 million purchase of the Global Re US parent. The clearance comes seven months after the legacy transaction was announced.

Hannover Re and its parent firm Talanx Group are the latest to distance themselves from the controversial fossil fuel which has seen environmentalists up in arms. “The Talanx Group is withdrawing from the provision of insurance protection for coal-based risks over the long term.” This was the insurance group’s opening line when it pledged its commitment to the “process of transformation” towards a lower-carbon economy. Hannover Re’s parent believes the move lives up to the goals of the Paris Agreement on climate change which the group noted it has been supporting for years. In addition, the German enterprise said it will engage in a dialogue with customers to find constructive means to strengthen climate protection.

J M Glendinning has bought Scarborough-based Ridley Macmillan Insurance Brokers. Ridley Macmillan’s Managing Director Julie Macmillan will stay with the business and work with the J M Glendinning team. The Broker was established over 20 years ago and places £1m of gross written premium annually.

 

 

Market Movers and Shakers

Liberty Specialty Markets (LSM), part of Liberty Mutual Insurance Group, has made two promotions within its Specialty Binders team in London which take effect immediately. Kerry Hall becomes Underwriting Manager for Property while Richard Wheeler becomes Senior Business and Strategic Development Underwriter.

AXA XL have announced the promotion of Charlotte Wilson to Global Head of Portfolio Solutions, with responsibility for developing and executing the global strategy for portfolio solutions. Ms. Wilson will be part of Philippe Gouraud’s Global Strategic Distribution team and will take up her new role on 1 May.

Allianz Insurance has named Jonathon Gray as its new Motor Manager in its Manchester branch. In his new role, Jonathon will be heading up Manchester’s Motor team with the aim of continuing to profitably grow in this key region. He will have responsibility for all of Allianz’s Motor underwriting activity in Manchester, as well as the training and technical development of the team. Having joined the organisation through Allianz’s Underwriting Graduate Scheme in 2010, Jonathon has held a variety of roles in Motor Fleet and underwriting. He worked his way up from graduate Underwriter to Senior Commercial Motor Underwriter, in both the north region and head office. Most recently he has spent the past two years as Allianz’s Branch Motor Manager for Woking, where he performed a similar role managing a team of ten Underwriters.

Aviva has announced the departure of CEO of UK insurance Andy Briggs – a move that follows swiftly on the back of the appointment of new group CEO Maurice Tulloch, a position that Briggs himself had been hotly tipped for in some circles. Briggs will also depart from the position of Director of Aviva plc, though he is set to remain with the firm until October 23, 2019 to “support an orderly transition.” The move sees Angela Darlington step into the role of CEO of UK insurance on an interim basis – Darlington is currently the group’s Chief Risk Officer. She joined the firm back in 2001 and was previously Chief Risk Officer of the UK Life business – her appointment remains subject to regulatory approval.

Brightside Group has appointed Richard Beaven as Group Chief Operating Officer (COO). Richard began his new role on 15th April 2019 and will report to Group CEO Brendan McCafferty. The move, which was announced at the end of 2018, is a key part of Mr McCafferty’s plans to further enhance service to customers and to build stronger and deeper relationships with distribution partners in an increasingly digitised sector.

The workforce of Argo Group International Holdings, Ltd. will now be in the hands of Tony Cicio. Appointed as Chief Human Resources Officer, Cicio brings more than three decades of experience to the international specialty Insurer. His expertise as a strategic business leader is a combination of human resources and finance.

 

 

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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