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General Insurance Newsletter - Friday 29th June 2018

29 Jun 2018

Insurance News

Ceta Insurance has revealed a 12% increase in pre-tax profit for the year ended 30 September 2017. The rise to £2.48m (2016: £2.21m) came as turnover went up by 13% to £7.35m (2016: £6.52m). The positive numbers all came in the year that Non-Executive Directors and management undertook a management buyout backed by private equity firm Kester Capital.

LexisNexis Risk Solutions has unveiled a new service designed to help Brokers and Insurers tackle fronting and ghost broking in the motor market. According to the firm its two-stage approach flags if quotes have been manipulated and then builds a picture of risk related to the named drivers on a policy as well as the main policyholder. The data experts claimed that the new offering was a first for the UK insurance industry.

CDL Group has reported a 12% rise in turnover to £52.68m for the year ended 30 September 2017. The software specialists also delivered a 13% leap in operating profit to £8.3m. However, profit after tax slipped by 3% to £6.62m.

Clear Group CEO Howard Lickens has confirmed the Broker is looking into raising more funds in order to finance its strategy going forward. Clear has an acquisitive strategy and last year bought Genavco Insurance and Robert Alexander. These deals have been funded with a £13m loan from Clydesdale Bank and according to Clear’s most recent results £5.8m remains.

It has been revealed that the Bank of England has already spent £1,590,776 on ensuring it is compliant with General Data Protection Regulation (GDPR). In order to prepare for GDPR the Bank set up a project team to run until January 2019. The figure for the spend as of 1 May includes £127,120 on software and £25,185 on training. The Bank also detailed, in a response to a Freedom of Information request, that external Consultants including employees on fixed-term contracts accounted for £492,655 of the total. These figures do not include time spent by the bank's employees preparing for GDPR as part of their day-to-day roles.

The IRM is introducing a new Certificate in Digital Risk Management to help Risk Managers get up to speed with the implications of new digital technologies and possible ways to manage the evolving risks and opportunities they bring. Enrolment for the online course will open this autumn for 2019. It is open to existing members as part of their continuing professional development and to individuals from other professions looking for an introduction to the subject. 

The Federation of European Risk Management Associations (FERMA) has welcomed the appointment by the European Commission of experts for the High-Level Group on Artificial Intelligence (AI HLG). FERMA has called for urgent attention to two priorities for European business: Drawing a clear line between the opportunities of AI technologies and the threats posed by the same technologies to the insurability of organisations as a result of over-reliance on AI during decision making processes; define ethical rules for the corporate use of AI not just for employees but also suppliers and all actors of the value chain.

Insurers are pursuing acquisitions and partnerships to transform business, innovate and fuel growth according to new KPMG survey. 80% of insurance Executives surveyed for the report expect to seek one to three acquisition targets or partnership opportunities over the next three years. The majority of Insurers are intending to make acquisitions that could transform their organisation for the future, rather than merely enhance their current business and operating models. More than 60% of the 200 Executives surveyed globally said transforming their business or operating model would be the key factors driving acquisitions, while just 21% identified enhancing their current model as the key factor. 

A majority of Executives around the world feel their organisations can do better when it comes to learning from their past cyber mistakes, according to the results of a newly released global survey conducted by the Economist Intelligence Unit (EIU) and Willis Towers Watson. The EIU surveyed over 450 companies across the globe about their strategies and the challenges they face in building cyber resilient organisations.  While most companies regard themselves as doing a good job on incident response, only 13% said their organisations were above average in incorporating learnings from cyber incidents into resilience strategies.

The Financial Conduct Authority has published feedback on its ‘Call for Input’ on Access to Insurance. The FCA is concerned that consumers find it difficult to access the specialist Travel insurance market. As a result, the FCA will work with key industry stakeholders to create a new service which will redirect customers to specialist providers.

A Brexit clause has been published by the International Underwriting Association to help companies manage insurance contracts as the UK leaves the European Union. The Brexit Contract Continuation Clause aims to clarify how firms will continue to pay claims despite any business disruption caused by a situation in which adequate transitional arrangements are not agreed. Insurers currently relying on the EU financial services passport to conduct cross-border business between the UK and continental Europe may not be licenced to continue providing cover, or pay claims, on existing contracts after March 2019. The new clause, therefore, allows a risk to be placed with both a UK domiciled Insurer and a ‘contingent’ EU-based Insurer. In the event of any Brexit difficulties, this contingent Insurer will step in and fulfil any policy obligations that the original carrier is no longer able to cover.

Figures for the month of May 2018 show a steady increase in firms adopting the London Market Group’s Placing Platform Limited (PPL) but there is more to do in getting companies to use the system, according to the PPL Board. London Market Group PPL is a core component of the London Market Target Operating Model (TOM) that allows Brokers and Re/Insurers to quote, negotiate, bind, and endorse business digitally. The new figures show that daily average practitioner log-ins have doubled since January 2017, while the number of risks placed has increased from 300 per week at the end of December 2017 to around 400 per week at the end of May 2018. Additionally, most major classes of business are now binding over 10% of their risks on PPL, with Financial and Professional lines at just under 60%.

The Association of British Insurers has submitted its response to the Solicitors Regulation Authority’s consultation ‘Protecting the users of legal services: balancing cost and access to legal services’. The SRA has proposed changes to the requirements it sets for Solicitors’ Professional Indemnity insurance cover, suggesting different activities require different levels of cover, and wanting to cut the minimum cover levels in all areas of legal service.

Insurers are being urged to invest in artificial intelligence after a recent study showed it could lead to a significant rise in revenue for their businesses. According to Accenture’s Future Workforce Survey, firms that commit to AI at the same rate as top-performing companies could enjoy an average revenue increase of 17% by just 2022. However, in order to enjoy the potential returns, Insurers must also leverage what Accenture calls “applied intelligence” – that is, collaboration between humans and machines.

A survey from the Lloyd's Market Association (LMA) has highlighted a number of key issues from Chief Operating Officers revolving around market modernisation, Brexit preparations and underwriting system upgrades. Market Modernisation has the highest priority with 93% believe straight-through processing is a viable option. Whilst almost 77% have their sights on upgrading their coverholder reporting systems and processes this year; 57% still see the decision to leave the EU as a high priority and favour using the Lloyd's Brussels subsidiary over the creation of their own EU subsidiary.

SME-focused MGA Firestone Surety Limited has undergone a rebrand – and the Firestone name is no more. The Fidelis Insurance Holdings Limited MGA will instead be known as Oakside Surety Limited going forward. The move was announced in a short Press release which stated that Oakside will remain focused on the SME sector of the surety market and be managed through Pine Walk Capital Limited.

Chubb has enhanced its cyber incident response management capabilities and introduced two new ways of accessing the service: a mobile app and a dedicated website. The company has expanded its network of incident response management firms. The network now includes services in more than 50 countries in Europe, North and South America, Africa, and the Asia-Pacific region. Under the newly expanded network, Managers are assigned based on the location of the incident, giving Chubb cyber policyholders access to local expertise across the globe. The company said that the expanded network would also mean faster response times. In addition, Chubb has launched an app and a website to help policyholders report an incident. The Chubb Cyber Alert (SM) mobile app provides customers with access to a live cyber response specialist, and can be used by individuals or integrated into larger corporate incident response plans, the company said.

According to the EY Financial Services Brexit Tracker, as of June 2018, 34% of the 222 companies being monitored have either stated their intentions or confirmed their plans to relocate part of their operations or workforce from the UK to elsewhere in Europe. Of those who have identified their destination, 21 firms have chosen Dublin – making the Irish capital the most favoured location so far. Next to Dublin is Frankfurt, with 12 firms expressing this choice since the Brexit vote, followed by Luxembourg and Paris. According to EY, most of the firms which picked Dublin are asset managers while Frankfurt proves popular among banks.

Insurer AmTrust is exiting its Marine lines of underwriting business in order to focus on more profitable areas of its book, following a strategic review. AmTrust with the Lloyd’s Marine book known to be under pressure and one of the lines of business that the market itself has been analysing in its efforts to improve underwriting performance, it’s perhaps no surprise that this would be an area where the focus might begin to wane for all but the specialist markets.

Advent Underwriting, in partnership with CFC Underwriting, has come up with a new online pricing and placing tool to cater to small- and medium-sized enterprises in the Middle East and North Africa (MENA) region who wish to take out Political Violence (PV) insurance. The Lloyd’s Insurer has launched the PVPlus platform and appointed Antoine Bdadouni as Business Development Manager. PVPlus features coverage for a broad range of perils such as Business Interruption, S&T (sabotage and terrorism), SRCC (strikes, riots, and civil commotions), and War; insured limits of up to US$10m; 100% capacity offered in one market; as well as fully compliant, bound slips produced at time of binding.

Mark Herbert, of Construction, is worried that comparison websites being used by contractors, including Roofers, Electricians, independent Builders and Plumbers, is leading to a significant insurance shortfall within the construction industry. Indeed, he is concerned that potentially around half of all UK contracting firms do not have suitable insurance in place to cover their works – creating massive risks for those that employ them. He wants Housing Minister Dominic Raab to introduce legislation that would prevent price comparison websites offering their services to contractors. He believes a change in law is necessary to stop them being enticed into cheap deals.

Markerstudy Retail has signed up Close Brothers Premium Finance (CBPF) as its new provider of insurance premium finance when its existing contract ends. It has been reported that the Broker currently has a five-year contract with Premium Credit, which is coming to an end. The Broker detailed that the new deal will see CBPF help Markerstudy’s Retail division customers spread the cost of insurance through premium finance.

It has been revealed that Paragon International Insurance Brokers has teamed up with AIG for an exclusive Professional Indemnity (PI) insurance product for law firms with two or three solicitors. AIG has historically targeted Solicitors with four or more partners and the move represents an expansion of its appetite in this segment of the market. Paragon confirmed that it was wholesaling the product and ready to build relationships with PI Brokers whether they have only a handful of clients fitting the criteria or a substantial book of suitable customers.

The respective shares of Willis Group Holdings and Towers Watson ceased trading at the close of the New York Stock Exchange and NASDAQ Stock Market on January 04, 2016 – the day the two firms successfully completed the major merger that brought Willis Towers Watson to life. Now Chief Executive John Haley is said to be in a position to consider new deals. Shortly prior to the Willis Towers Watson transaction, Willis Group in 2015 exercised its right to acquire the remainder of French Broker Gras Savoye – 33% of which it first owned in 1995 – and also agreed to buy 85% of London independent wholesale insurance Broker Miller. Towers Watson, meanwhile, was the product of a 2010 ‘merger of equals’ between Towers Perrin and Watson Wyatt. In 2012 it snapped up private Medicare exchange operator Extend Health. 

The FCA has announced plans aimed at helping victims of push payment fraud recover lost funds, although has admitted its proposals could complicate firms authentication processes. UK Finance data on APP fraud show there were 43,875 cases of APP fraud and total losses of £236 million in 2017. An initial review of the way banks handle APP scams conducted by the FCA found banks’ procedures were inconsistent, their existing fraud detection systems could not easily detect APP fraud, and they didn’t collect enough data. The FCA is now consulting on requirements for firms to handle APP complaints in line with complaints handling rules in the FCA Handbook and to provide the victims with access to the Financial Ombudsman Service. 

Be Wiser Insurance are recruiting for this year's intake of their insurance degree programme. They are looking for students across Hampshire, finishing their A-levels this summer to apply for the programme. Accredited by the University of Chichester, the scheme will see participants earning £18,000 in the first year. Be Wiser said the salary will be up to £28,000 at the end of the three-year degree. Meanwhile, the student loan will be repaid by the Andover-based Broker on successful completion of the course and final placement within the growing firm.

Tokio Marine Holdings, one of the most acquisitive Insurers in Japan, is on the hunt for deals in Asia and beyond, backed by a US$9bn war chest. Japanese Insurers have been ramping up acquisitions in recent years, due to an ageing population and rock-bottom interest rates in their home market. Increased exposures to natural catastrophes are also forcing insurers to diversify their businesses. Tokio Marine, which is the largest Property and Casualty Insurer in Japan in terms of market value, has spent over US$15bn in acquiring insurance businesses across the globe, including the recent purchase of Insurance Australia Group’s Asian units.

Online wholesaler Policyfast, part of Coversure, is set to focus on data enrichment and innovation following the group’s recent management buyout. The MBO was completed in May and backed by private equity firm Livingbridge. Policyfast, which focuses on niche products including Fleet, Property, Courier and Liability classes, currently controls £43m of gross written premium (GWP) and Parker predicted this would increase to over £60m in the next two and a half years. According to the Managing Director, the firm is set to launch a number of new products including a new Cyber Liability policy, which will be available next month. He added that the business had recently reviewed its current products in order to revise them.

Beech Underwriting has brought out a new Terrorism product for contract works which it claimed will save the building industry thousands of pounds a year in premiums. The Lloyd’s coverholder and Terrorism cover specialist detailed that up to now Terrorism premiums through government-backed Pool Re have been based on company turnover and argued that it had “turned that completely upside down” and could deliver cover based on a maximum limit required for the year.

Folgate has received approval from the Prudential Regulation Authority (PRA) to start writing business again - the business will be underwritten by its owner APC Underwriting. The Insurer, bought by APC Underwriting for £1.9m from Towergate in 2014, had been in run-off since 2002 but gained approval last month to activate for new business.




Market Movers and Shakers

Allianz Insurance has appointed Kevin O’Neill as its new Branch Manager in Scotland.

Lloyd’s Market Association (LMA) has announced that Stephen Ranzetta and Paul De Vido have been elected to its Personal Accident , following a recent ballot at Lloyd’s.

AXA Group Chief Executive Thomas Buberl is succeeding Allianz SE board of management Chair Oliver Bäte at the Pan-European Insurance Forum (PEIF).

QBE Rehas appointed Stephen Postlewhite as Deputy Global Chief Underwriting Officer.

AIG Life & Retirement, a division of American International Group (AIG), has appointed Adam Winslow as its new Chief Executive Officer for International business. 

The Nexus Group (Nexus) has announced that Karen Morris has joined the board as an independent Non-Executive Director of Underwriting Operations, effective immediately. 

Thomas Miller has bolstered its corporate structure further by appointing David Smith to serve as Group Risk & Compliance Director.

Phoenix Group has named Susan McInnes as the CEO of Standard Life Assurance, whilst Jonathan Pears is appointed Chief Risk Officer and will join the Phoenix executive committee along with John McGuigan, who has been appointed to Group Head of Customer.

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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