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General Insurance Newsletter Friday 31st July 2020

31 Jul 2020

Registration for the insurance industry’s festival for Diversity and Inclusion, Dive In, is now open. The festival, developed by Lloyd’s to drive diversity across the market will take place using a virtual format. Participants globally will now be able to attend any one of over 90 virtual events taking place in over 30 countries from the 22-24 September. Each event in the three-day virtual festival have a capacity of up to 600. 

RSA has reported a rising group underwriting profit but falling premium for the first half of 2020. According to its financial results, published on 30 July, RSA’s group underwriting performance (excluding exits) grew by 33% to £240m (H1 2019: £181m). Group total underwriting profit for the six month period was £207m, up from £153m in the first half of last year. Combined operating ratio for the group was 92.2%, an improvement from the 94.3% reported in H1 2019.

Hastings has confirmed it is in discussions with Sampo Oyj and Rand Merchant Investment Holdings (RMI) over a possible cash offer to acquire the issued and to be issued share capital of Hastings not already owned or controlled by Sampo and RMI.  RMI is a 29.7% shareholder of Hastings having invested in 2017.  Hastings has developed a panel, excluding RMI representative Herman Bosman, to consider the approach.

Flood disruptions could cause a business’s stock to drop significantly over the succeeding 12 months, reflecting investors’ shaken confidence in the company’s managerial decision-making, according to a new study commissioned by FM Global. The study, conducted by analytics advisory group Pentland Analytics, examined 71 of the world’s largest publicly traded companies. All companies in the study reported financial damage from a major flood event in recent years. Twelve months after those flood losses, the companies’ shareholder value had declined by an average of 5%, equivalent to a collective $82 billion.

LV General Insurance has announced proposals to reshape its business over the next 2.5 years to enable it to operate more efficiently. Following the acquisition of the general insurance business from L&G in January 2020, it’s proposed that this part of the business will now be fully integrated into LV GI.  At the same time, changes to the existing claims function in LV GI are being proposed to ensure there is a greater focus on customer service and technical capabilities. Steve Treloar, CEO of LV GI, has confirmed that the 600 roles at risk of redundancy will come from across LV GI and Legal & General. Treloar commented “It will be a broad brush split between L&G and LV, but we will firm those details up.” The Insurer stated this week, that the move was designed to make the business more efficient with a number of roles in its claims function likely to be hit.

Home and Motor customers of Jelf between 2012 and 2018 have been offered redress after a reviewed showed they may have not been offered the most competitive terms available when they purchased the policy. A spokesperson for Marsh Commercial said: “Following a review of Home and Motor insurance policies sold by Jelf between 2012 and 2018, we identified that some clients may not have been offered the most competitive terms available.

Results from a survey carried out by Aventus in partnership with the Managing General Agents Association has revealed that fewer than 50% of MGAs offer a ‘modern customer experience’.  In the survey carried out at the end of June, 58% of MGAs revealed that they do not have a single view of the customer through their IT platform (with 18% not knowing if they have).

Sabre Insurance has reported a GWP slip for the first half of 2020. GWP fell almost £25m compared to the £101.2m reported in the first half of 2019. COR remained steady at 71.7%, a slight deterioration on the 71.5% reported last year. Meanwhile, profit before tax fell to £27.8m from £30.5m.

The Financial Conduct Authority has launched the second phase of its consultation on guidelines for how companies deal with vulnerable customers. The regulator noted that more than 24m people display one or more potential characteristics of vulnerability – which include physical and mental health issues, recent life events such as bereavement, capability and financial resilience. Over a million people received debt advice last year.

The Chartered Insurance Institute has revealed actions Insurers can take to restore trust in the insurance profession as small and medium-sized business becoming increasingly concerned about policy exclusions. While the UK was in lockdown to slow the spread of the coronavirus in April, the CII’s Public Trust Index surveyed 1,000 consumers and 1,000 small businesses from across the UK asking them to share whether the insurance profession was performing as they expected. The poll showed small and medium-sized that had experienced little financial impact due to coronavirus restrictions were still focused on the same issues as before lockdown – most importantly, renewal pricing. SMEs that had been somewhat impacted by coronavirus were concerned about how the policy had been explained to them – levels of transparency and the quality of advice they have been given. Businesses that had been significantly impacted by coronavirus reported they wanted immediate assistance around their claim and to know that the policy was going to address their needs. SMEs worst affected by coronavirus restrictions reported concerns around the transparency of their policy stating they wanted more “clarity of language” so they knew how and when they could make their claim.

In other news...Members of the insurance and personal finance profession who have shown leadership qualities and worked to raised standards in the last 12 months have won a Chartered Insurance Institute 2020 Award. Earlier this year, the CII asked members of the profession to nominate individuals whose work with the CII’s local and affiliate institutes and or contribution to their local community was raising standards in the profession. The awards, which are an annual event, are sponsored by Aviva. This year the Allan Bridgewater medal for outstanding achievement that benefit the wider insurance profession went to Husain Al Ajmi, Managing Director of The Foundation for Insurance and Finance Education Limited (FIFE). The Emerging Professional of the Year award went to Dionne Wall, Mortgage Adviser for Financial Options, who has shown she is a rising star of the future. Juliet Halfacre, Senior Business Developer at Allianz Engineering, and Michael Kevin Clementson, Head of Agriculture Crawford & Co Adjusters Ltd picked up the Outstanding Award. Dr Christianah Bola Onigbogi, Chief Executive of CBO Insurance Brokers Ltd, received the Exceptional Award. 

Amazon Pay marked its foray in the insurance space by offering two and four-wheeler insurance policies, in partnership with Acko General Insurance Ltd. Customers can now purchase insurance in less than two minutes with no paperwork. Prime members get extra benefits including additional discounts. The experience of buying insurance has been made easy by Amazon Pay in partnership with Acko, by providing simple and easy to understand purchase journey that facilitates customers to buy insurance effortlessly in a few easy steps. 

International insurance Broker, Gallagher (AJG), has gone live with SSP’s digital insurance platform, supporting their direct digital distribution platform under their popular IMAR Insurance brand. The solution provides the capability to deliver tailored SME insurance packages with further product releases planned for this year.

In other news...Willis Towers Watson has joined forces with insurance software Provider SSP to optimise real-time pricing and time to market for Insurers. SSP has joined Willis Towers Watson’s Radar Live Collaboration programme, a price delivery platform that allows Insurers, MGAs, and Intermediaries to develop their rates, rules, and adjustments then deploy them directly to the market in real-time.

Neota Logic, creators of the world’s leading no-code automation platform, announced that leading health, safety and risk management specialists, Cardinus, has launched an advanced ergonomic assessment tool, Healthy Working Pro. Neota is a no-code automation platform, providing professionals with a wide range of easy-to-use tools to rapidly build applications that automate any aspect of their services. Healthy Working Pro includes 20 well known academically verified algorithms and ergonomic measurement tools and will be used by expert ergonomists and physios to provide recommendations to mitigate the pain and discomfort for the assessed individual and job functions. Cardinus also plans to release a suite of risk and compliance-based applications built in Neota Logic.

honcho - the UK’s first reverse-auction marketplace for financial services - has today launched a partnership with leading employee benefits Provider Personal Group, to provide over 475,000 workers across the UK access to honcho’s revolutionary new insurance service. Personal Group was founded 35 years ago and has grown to become one of the UK’s foremost providers of employee benefits services.

Britain’s accounting watchdog, the Financial Reporting Council (FRC) has revealed that it has fined the accountancy and business advisory firm BDO £160,000 for unintentional rule breaches during its audit of the international Insurer AmTrust Europe, and has said the auditor will have to implement a training programme. According to Reuters, the FRC said the fine was reduced from £200,000 due to early admissions with regards to 2014 and 2015 audits.

Insurtech funding rebounded in the second quarter after a COVID-19-induced slowdown in the first months of 2020, according to a new report from Willis Towers Watson. According to the firm’s Quarterly InsurTech Briefing, US$1.56 billion was raised by insurtech firms in the second quarter, a 71% spike from Q1. The rise was driven in part by late-stage investments, including four “mega-rounds” in excess of US$100 billion.

AXIS Capital Holdings Limited has revealed its financial results for the second quarter of 2020, which saw a noticeable drop in net income – despite an increase in gross written premiums. For the second quarter ended June 30, 2020, AXIS Capital posted net income available to common shareholders at US$112 million (around £86.5 million, or US$1.33 per diluted common share). This represents a year-over-year decrease from Q2 2019’s net income available to common shareholders of US$166 million (around £128.3 million, or US$1.97 per diluted common share).

Beware of ghost Brokers, IFB warns drivers. As restrictions ease and people get back on the road, drivers may be keen on searching for new insurance. But with many already reeling from the pandemic’s financial impact, some may go to desperate lengths to secure cheap policies. The situation has prompted the Insurance Fraud Bureau (IFB) to remind car insurance holders to practice due diligence in looking for a new policy.

Insurtech company Worry+Peace has marked its first foray into open insurance with the release of a pair of automated and scalable review-focused tools accessible to all Providers who are using the firm’s online platform. Reviews API gives each insurer a default key and a corresponding product key to every product it lists on the Worry+Peace marketplace, allowing for seamless data transmission. Onboarding for existing Providers has already started and is set to be completed by the end of August.

The insurance sector has made strides in ensuring gender parity in key leadership positions, a new study has revealed. Researchers found that 30% of insurance companies in the FTSE 350 Index, which lists the 350 largest firms on the London Stock Exchange, have women on their executive committees. The figure is up 10% from last year. More than half (55%) also have executive committees that are at least 25% female.

Davies is continuing on the acquisition trail, swooping for Citadel Risk’s captive management operations a month after it acquired automated and digital solutions Provider Codebase8 Limited. Citadel Management & Cedar Consulting, the captive management and consulting business of Citadel Risk, is Davies’s third acquisition this year following the moves for Keoghs and Codebase8.

 

 

Coronavirus-related News

Property and Casualty (P&C) insurance giant Chubb Limited has been hit hard by the COVID-19 pandemic, with the company’s financial results for both the second quarter and first half of 2020 showing losses. In the quarter ended June 30, Chubb suffered a US$331 million (around £254.9 million) net loss – a plunge from the US$1.15 billion (around £885.7 million) net income enjoyed by the insurer in the same three-month span last year.

Markel Corporation – the Richmond-headquartered group with insurance hubs in London, Bermuda, and New York – has taken a financial beating because of the coronavirus outbreak. For the six months ended June 30, Markel posted US$325 million (around £250.3 million) of underwriting loss attributed to the pandemic; net investment losses worth US$770.2 million (around £593.2 million); and a comprehensive loss to shareholders amounting to US$260.4 million (around £200.6 million).

South African Insurer Old Mutual has announced that it will offer a settlement to small companies that are fighting its decision to reject their claims related to a COVID-19 lockdown, Reuters reported. Old Mutual and other South African Insurers, like many Insurers globally, have declined to pay out on Business Interruption claims, stating that the policies did not cover coronavirus lockdowns.

The film and television production industry, which contributes more than £12 billion to the UK economy annually, has been thrown a lifeline amid insurance woes. To address the lack of available COVID-19 coverage, the government has launched a country-wide £500 million Film and TV Production Restart Scheme. It will cover future coronavirus-related losses for cast member and crew illnesses as well as filming delays or disruptions.

Brokers risk being heavily impacted by the Covid-19 crisis, as experts warn they will struggle to find Professional Indemnity (PI) insurance that includes cover for claims arising from the pandemic. PI specialists have urged the Financial Conduct Authority (FCA) to bring clarity on whether brokers could be left non compliant if they cannot secure cover for losses relating to Covid-19.

The landmark court case between the Financial Conduct Authority (FCA) and several of the UK’s largest Insurers regarding their liability to pay out on pandemic-related claims has been dominating headlines. Now, a lawyer for Hiscox has rejected the argument that the pandemic, and the resulting government action, should be treated as a single cause of lost income.

Jonathan Gaisman QC, representing Hiscox, continued his arguments from the day before, claiming the FCA has “thrown away the rulebook” in order to allow its causation exercise and that the regulator’s approach is not justified. Gaisman further stated that the FCA’s proposed counter-factual – a situation where the pandemic had not happened – is “artificial” because it requires people to imagine something that never happened. Gaisman began his online presentation to Mr Justice Butcher and Lord Justice Flaux on day five of the case by tackling the Provider’s non-damage denial of access and public authority clauses. Starting with the public authority clause he cited the four factors that needed to be present as set out in the defendants’ joint skeleton argument on causation. This covered the sequence where the insured must prove loss has been caused by an interruption, caused by inability to use the insured premises.

Miracle Theatre operator Actors’ Playhouse Productions is suing Paris-headquartered SCOR and wholly owned subsidiary General Security Indemnity Company of Arizona in a business interruption insurance class action lawsuit that is said to be the first case in the US brought against the global Reinsurer. Filed at the United States District Court for the Southern District of Florida by law firms Podhurst Orseck and Boies Schiller Flexner, the complaint revolves around the all-risk Property insurance policy obtained by Actors’ Playhouse last year for the performing arts theatre in Coral Gables. Operations of the Miracle Theatre are suspended due to the coronavirus pandemic, but a claim for Business Interruption coverage was denied.

The impact of COVID-19 on the financial results of insurance companies continues to become clearer with Lancashire Holdings Ltd announcing its 2020 interim results for the six month period to June 30, 2020. Assessing the effect of the crisis, the group revealed that without including the COVID-19 loss estimate, it holds a combined ratio of 88.9% - while including this, it stands at 106.9%. The underwriting income of the group has dropped to $39.4 million (£30.4 million) from $79.4 million (£61.2 million) in the same period in 2019 and the business reported an overall loss in its profit before tax of $23 million (£17.7 million) compared with the profit of $40.5 million (£31.2 million) it registered last year. The overall comprehensive loss income recorded by the business was 14.7 million (£11.3 million), compared with last year’s profit of $68.7 million (approx. £53 million).

MAPFRE has felt the bite of the economic downturn caused by the COVID-19 crisis as its revenue dropped for the first six months of 2020. MAPFRE’s latest data has revealed that its revenue for the first six months of 2020 totalled €13.28 billion, an 11.8% decrease compared to the same period last year. Its earnings at the end of June totalled €271 million, 27.7% lower than the result obtained between January and June of the previous year.

 

Over the past few years ERS has continued to invest in their UK agriculture teams to better serve the insurance needs of rural businesses across the UK. Their latest agri hire, Sam Linton, has been appointed a Regional Trading Underwriter, focused on supporting Brokers across the North East and North West of England. 

Victor Insurance, the world’s largest Managing General Underwriter, has announced the appointment of Erik Johnson as Deputy Active Underwriter for Victor Syndicate 2288. Johnson will be based in London and will report to Jill Frances, Chief Underwriting and Operations Officer and Active Underwriter for the Lloyd’s syndicate. Johnson has more than 18 years of industry experience on both the brokerage and carrier sides. Prior to joining Victor, he served as Head of Syndicate Management for Pioneer Underwriting. He has also held positions at Allied World, Marsh and Deloitte UK, and has served at Lloyd’s as Strategy Manager.

Tysers, a wholesale insurance Broker in the London market, has announced that Clive Buesnel will become its next Chief Executive Officer, subject to regulatory approval.  The position is a new role for the UK. Tysers detailed that Buesnel has spent much of his career in both operational and strategic roles in the UK and global insurance markets, most recently serving as a Senior Partner, Vice Chairman and UK Head of Insurance at Deloitte. Prior to Deloitte, he spent 10 years at Xchanging

There is a new Head of Credit and Political Risk (CPR) at Canopius, in the form of Stephen Pike. Pike, who joined the firm back in 2017 as an Underwriter, actually began his career at Merrill Lynch, focusing on M&A and leveraged finance. He later moved to ED&F Man Capital Markets before making the switch to Canopius. Now, he will report to Bernie de Haldevang who oversees the overall head of credit, political and crisis (CPC) at the firm.

Global Reinsurer PartnerRe Ltd. has announced the appointment of Jacques Bonneau as President and CEO. He takes the leadership reins at a challenging time for the reinsurance giant – on the same day (Tuesday, July 28) that the firm announced a drop in net income for the second quarter (Q2) of 2020.

Hugh Savill, who made the switch to the Association of British Insurers (ABI) one and a half decades ago from the then Department of Trade and Industry, is retiring at the end of 2020. Succeeding the ABI stalwart as Regulation Director is Charlotte Clark CBE, the Director of Capability and Learning at the Department for Work and Pensions. The former HM Treasury pensions and savings head will come onboard the trade body on October 19.

Axa XL has made changes to the leadership team for its UK and Lloyd’s region. This follows the appointment of Sean McGovern as CEO UK & Lloyd’s market earlier this month. He took over the role on a full-time basis after being interim CEO since Paul Greensmith left the business in April. The provider stated that the appointments, effective immediately, are part of the proposed changes to the operating model of Axa XL’s insurance business following a strategic review.

Close Brothers Group has stated it is bringing together the leadership of its retail businesses, Motor and Premium. The move sees Sharon Bishop step down from her role as Chief Executive Officer of Close Brothers Premium Finance (CBPF). Bishop took over as CEO of CBPF in 2014 following the departure of Janet Wilson. She has held various senior roles within the firm since joining the banking parent company in 2000.

As it looks to stand out amid the Broker pack, Oneglobal has picked up a former CEO as its new Non-Executive Director. The company has brought in Alan Grant for the role, the former CEO of SCOR UK. Grant has a long and distinguished career in the industry that has also seen him as Chairman of Dual International Ltd., and Active Underwriter of Syndicate 991 at Lloyd’s. In addition, he is a Non-Executive Director at Argenta Syndicate Management Ltd and Thomas Miller Holdings Ltd, and says he is looking forward to his new role.

Ecclesiastical has appointed Jeremy Trott as its new Claims Director ahead of the retirement of David Bonehill in three months. Trott brings a strong focus on improving customer experience, specifically in the claims process. He held various leadership roles at Allianz for over 14 years, most recently as the head of claims operations, where he was responsible for the operations of a 700-strong claims function in India and the UK.

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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