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General Insurance Newsletter Friday 3rd July 2020

02 Jul 2020

Aon has retracted on its previous decision to temporarily cut salaries across the business by 20% in response to the current pandemic. In a statement published on 30th June, the business promised that it would repay staff in full, plus 5% of the withheld amount. This follows a filing on 27 April, where the broking giant explained that around 70% of its staff would be expected to take a temporary 20% pay cut, as it pledged that it would not make any redundancies due to Covid-19. In the statement, Aon noted that it is now “confident” that temporary salary reductions are no longer necessary.

Ataraxia has launched a crossover network which aims to help Brokers boost their income as well as being a stepping stone for firms looking for a “gentle exit strategy”. The acquisition firm said that Ataraxia Lite would work as a traditional network, giving Brokers access to products from UK Insurers, as well as support to grow through making deals. According to Ataraxia Managing Director, Adam Boakes, the model also provides Brokers with a guaranteed investor in their business once they start thinking about succession planning. However, the business clarified that there are no ties to the membership and that Brokers are not required to sell shares to Ataraxia now or in the future.

Independent Broker Senior Wright has been bought by Jensten Group (formerly Coversure) for an undisclosed sum. Jensten has received regulatory approval to acquire 100% of the share capital of the wholesale and retail Broker. The acquisition is effective from the 1 July 2020. According to Jensten Group Senior Wright places in excess of £20m of gross written premium in the Lloyd’s and company markets.

Insolvency Risk Services (IRS) has been bought from MS Amlin by broking group Specialist Risk Group (SRG) for an undisclosed sum subject to regulatory approval. SRG is growing in the UK via acquisition and counts Miles Smith, Square Mile Broking, David Codling and Associates and The Underwriting Exchange as part of its portfolio. The company bought Miles Smith from MS Amlin in 2017.

CFC has added a new product for businesses pursuing portfolio acquisitions to its Transaction Liability suite. The new solution is intended to simplify and speed up the process for private equity firms and businesses pursuing a portfolio of add-on acquisitions for existing or newly acquired platform companies.

Sompo Global Risk Solutions (GRS), which is part of Bermuda-based Property and Casualty insurance and reinsurance Provider Sompo International, has created a new unit in London. Called Sompo GRS Europe, the team was formed to serve the European market through retail Brokers, offering Commercial Property, primary and excess Casualty, and Environmental coverage, as well as parametric natural catastrophe products. Made up of underwriting, actuarial, claims, and risk control specialists, the unit will be led by vice president and Sompo GRS Europe head Adam Bergen. He will be based in Sompo International’s London office.

Aviva confirmed that it has pulled advertising from Facebook as a campaign calling on firms to suspend advertising with the tech giant grows. A spokesperson for the provider said: “We regularly review which social media platforms we use and have taken this moment to pause and reassess Aviva’s use of Facebook for advertising in the UK.” The BBC reported that the Insurer joined InterContinental Hotels in suspending its advertising.

Insurer Ecclesiastical has commented on a “favourable” result for the full year 2019 in its results posted on Companies House. The figures show that its UK & Ireland general insurance underwriting profit was £20.4m, down from £29.4m the previous year. The Insurer pointed to a favourable performance for its Liability book and a solid out-turn on its Property book and said the reduction was due to significantly lower prior year releases. The business also filed a 6.2% increase in GWP from £242m to £257m. Across the company profit shot up to £58m from £15.2 the previous year.

The Danish Financial Supervisory Authority’s (DFSA) has withdrawn unrated provider Gefion Insurance’s license as an insurance company. As a result, Gefion has entered into solvent liquidation and will no longer write new business or renewals. This follows the DFSA’s decision not to approve the Insurer’s recovery plan in March this year. At the time the Provider was also ordered to stop writing new business.

Global Risk Partners (GRP) has bought healthcare broker Premier Choice Healthcare (PCH) for an undisclosed sum. This is GRP’s first deal since Searchlight took a majority stake in the group earlier this month and sees the business expand into the health insurance sector. Following completion PCH will become GRP’s healthcare hub and Stephen Ross, Head of M&A at GRP, stated that the consolidator is now looking to buy more healthcare businesses and portfolios.

Allianz Global Corporate & Specialty (AGCS), the industrial Insurer of Allianz Group, has announced a comprehensive transformation program, “New AGCS”. The program aims to regain profitability and market leadership in the corporate and specialty insurance segment. The company has made a number of new leadership appointments as part of the move, and aims to strengthen its technical capabilities across its core underwriting and claims functions, streamline its organisation and processes, enhance its current distribution and sales abilities, and invest in digitalisation.

Zurich UK, a signatory of The Race at Work Charter, has bolstered its commitment to tackling inequality in pay and removing career progression barriers for ethnic minority employees by launching a programme designed to do just that.

Lemonade - the “revolutionary” insurance company utilising bots and machine learning to replace Brokers - has raised US$319 million in its US initial public offering. Lemonade will list its shares on the New York Stock Exchange under the symbol “LMND.”  The IPO values Lemonade at around US$1.6 billion – less than the US$2.1 billion it was valued at in 2019 after it raised US$300 million in a funding round led by Japanese conglomerate SoftBank. Other notable participants in that funding round included Allianz SE and GV – Alphabet Inc’s venture capital arm. SoftBank owns a 27.3% stake in Lemonade.

Insurers were able to secure sufficient reinsurance capacity at the June 01 and July 01 renewals, according to a new report from Willis Re, the reinsurance division of Willis Towers Watson. Capital levels were only 5% lower than at the end of 2019, a “remarkable recovery” Willis Re attributed to investors’ appetite to support additional capital and Reinsurers’ “prudent risk and cost management.” By comparison, capital levels at the end of March were 30% lower than at the end of December.

There is a new name in the Aviation insurance market, with Rokstone Underwriting launching a new division. Part of the Direct Insurance Group, the firm boasts an additional $50 million A-rated capacity for its arrival. The licensed paper for the facility comes from long-standing partner Best Meridian, with capacity limits secured for Hull up to $5 million, Airline and Aerospace Liability up to $50 million and general Aviation Liability up to $30 million.

Specialist Insurer Beazley, Guidewire Software, and Guidewire PartnerConnect consulting partner Sollers Consulting have announced that Beazley has successfully finalised its claims transformation program, powered by Guidewire ClaimCentre. ClaimCentre is now fully integrated with the London Market Electronic Claims File Write-Back (ECF), the companies said. Beazley and Guidewire worked closely to add ECF Write-Back to Guidewire’s London market claims functionality. The functionality gives Lloyd’s syndicates and the London company market the benefits of a shared electronic claims file system – enriched pre-agreed data, transparency, tailored claims views, and significantly shortened claims lifecycles.

Marine Insurers North P&I Club and Sunderland Marine Insurance Company have sealed a formal transfer of business, some six years after the merger of interests between the companies back in 2014. The move cements Sunderland Marine’s specialist fishing and coastal vessels, as well as its owners’ fixed premium P&I and aquaculture business, within the North Group.

Halfway across the world, major lenders Commonwealth Bank of Australia and Westpac Banking Corporation are letting go of their insurance operations to focus on their core business; here in the UK, behemoth Lloyds Banking Group is being encouraged to give its insurance & wealth division a boost. “They have the joint venture with Schroders and are trying to push more into the Scottish Widows business, so we would like to see more of that,” a new Financial Times report quoted a top Lloyds shareholder as saying.

The applications are now open for the Lloyd’s Market Charity Awards. Run by Lloyd’s Charities Trust, the awards have granted £900,000 to nominated charities over the past decade. This time around, up to £25,000 in donations will be awarded to 30 charities in response to the impact of the coronavirus crisis to their funding.

It was in October last year that Smithers Purslow bought out its Manchester-based counterpart Byrom Clark Roberts – and now the latter is set to assume the name of its new owner. The Smithers Purslow logo will be refreshed to include the Byrom Clark Roberts company star, to acknowledge its heritage, while the “independent professional expertise” slogan will remain the same.

Insurtech bolttech is continuing its rapid expansion – moving into a 12th market across three continents. The company is now entering Austria having established a partnership with local telecommunication operator, Drei. The move means that Drei’s customers will now have access to bolttech’s device protection, beginning with mobile phone switch service “Drei Direkttausch”, the first non-insurance switch programme in the country.

The legal industry has not traditionally been at the cutting edge of diversity and inclusion (D&I), but the industry has made strides forward in recent years. Statistics from the Solicitor’s Regulation Authority (SRA) revealed that in 1970 just 10% of new entrants were female while, in the mid-1990s, only 2% of solicitors identified as BAME. However, as of March 2020, 49% of solicitors are women, while 21% are BAME.

The global usage-based insurance market is projected to reach US$77.25 billion by 2026, from US$25.46 billion in 2020, according to a new study by Valuates Reports. The market is expected to grow at a compound annual growth rate of 20.32% between 2020 and 2026. The growth of usage-based insurance, which uses telematics to base premiums on the driving behaviour of consumers, is being driven largely by the increasing adoption of smartphones and connected vehicles, Valuates Reports said. Auto manufacturers are increasingly working with smartphone and tablet manufacturers to deliver products and services to be available in vehicles.

With the UK celebrating Armed Forces Day this past Saturday, Liberty Specialty Markets took the opportunity to express its own commitment to those who serve us so bravely. The Liberty Mutual company has committed to honouring the Armed Forces Covenant – a pledge taken by organisations to acknowledge those who have served, and their families, and to ensure they are treated with fairness and respect in their communities. Its ultimate aim is to help them with issues such as their post-military careers, as well as housing and education.

 

Coronavirus-related News

Lloyd’s has published a number of ways the insurance industry could fast-track global economic and societal recovery from the far-reaching impacts of Covid-19. The market has revealed three open source frameworks, which it said will help build future resilience through innovative partnerships and products together with a Centre of Excellence to better understand, model and provide insurance for systemic catastrophic events.

What happens to business once all the coronavirus-themed restrictions are lifted? Will we stick with the Zoom and MS Teams calls? Or are we heading back to the office and our face-to-face coffee meetings? A survey of MGAA members found that 80% expect a return to face-to-face client and Broker meetings, with just 15% expecting that social media would remain their preferred communication method after lockdown. The survey was carried out by Full Circle, the insurance communications agency, with executive director Alex Wise noting that the insurance industry had bucked its image of being “change-resistant” during the pandemic. “And yet, as the survey shows, there is clearly a hankering for a return to the traditional face-to-face way of doing business,” he added.

It’s crunch time. That’s the verdict on the M&A insurance market, delivered by Howden M&A, part of international insurance Broker Howden. It has published its 2020 EMEA M&A Insurance Claims Report, which analyses claims data from W&I policies placed on more than 1,000 deals during the last five years and also considers the impact of COVID-19 on activity in 2020. It concludes that a large dent in premium income since March 2020, coupled with continued notification of claims from prior years, is likely to lead to a capacity crunch by early 2021. With some more traditional lines of insurance seeing double digit increases, M&A rates have been decreasing with Insurers having fewer deals to write.

An increasing number of Brits are choosing to take their holidays at home this year on the back of the COVID-19 pandemic, especially with travel still largely restricted. Now one Insurer has shed light on the risks that may be involved with that decision, with some useful statistics Brokers may wish to put in front of their clients. According to a survey conducted by Tempcover, 52% are still not entirely comfortable with air travel and 79% want to use their vehicle as their primary mode for transport this summer. Indeed 82% are planning to travel on the road at least 100 miles each way to their holiday destination, with 28% even travelling up to 500 miles each way. As such, the Insurer is concerned that, after lockdown, many drivers may be out of practise and prone to making mistakes. Another worry is that drivers may spend too much time on the road before taking a break – with less than 38% abiding by the Highway Code’s recommendation to not drive for more than two hours without a 15-minute break. In addition, the Insurer offered a warning around insurance cover with just under half planning to share the driving on-route to their summer destination even though as many as half may not be fully covered to do. More than 27% said they do not have an additional driver on their policy, prompting CEO of Tempcover Alan Inskip to issue a reminder to motorists.

Average UK Motor premiums began to fall as the country went into lockdown, according to the latest set of data published by Consumer Intelligence. The research firm stated that average premiums now stand at £876 following a 1.4% fall in the last three months, most likely as a result of the pandemic. John Blevins, pricing expert at Consumer Intelligence said: “With fewer cars on the road and the subsequent reduction in claims, it seems some of those savings may be making their way back to customers via reduced premiums.”

Insurers have continued to go against the Financial Conduct Authority’s (FCA) intention to use the Cambridge Analysis as evidence in the Business Interruption test case. The Cambridge Analysis is relied upon by the government and Public Health England in determining the rate of infection. At a case management conference (CMC) on Friday 26 June, the eight Insurers involved in the case opposed the use of the analysis because they have not been able to find an expert of their own. It is likely that this will result in a second shorter trial in September.

Allianz Insurance has hired Chris Skolsky to the role of Technical Claims Manager, Casualty. Skolsky joined Allianz in 2006, starting as a Claims Assistant, Motor. Prior to his new appointment, he held the position of Claims Specialist.

Marsh has appointed Mike Johnson as Chairman of the UK Construction, Infrastructure & Surety Practice, Marsh JLT Specialty. Effective immediately, Johnson succeeds Tim Smith who is retiring after more than 30 years in the business.

Gallagher has hired Mark Ettershank as Head of Warranty & Indemnity (W&I) and Tax in Gallagher’s Major Risks Practice. In his new role, Ettershank is responsible for spearheading new business, expanding technical expertise and growing the team.

Tysers Insurance Brokers is delighted to announce the appointment of Belinda Schofield as Independent Non-Executive Director to join the UK Board, effective from 1 July 2020. Schofield is currently the CEO at the Association of Lloyd’s Members. She is also the chair of the Chartered Insurance Institutes Disciplinary Decision Review Panel and an external member of the Lloyd’s Enforcement Panel.

AXA’s latest Shareholders’ Meeting revealed resolutions recommended by its Board of Directors, including several appointments. AXA’s shareholders approved the appointment of Mmes Isabel Hudson, Marie-France Tschudin, Antoine Gosset-Grainville, and Helen Browne as Directors for a four-year term. Mmes Irene Dorner and Angelien Kemna were also re-appointed as Directors for a four-year term.

Lloyds Banking Group’s General Insurance and Protection Director Craig Thornton is succeeding former Ageas UK Chief Executive Andy Watson as Chair of the General Insurance Council (GIC) at the Association of British Insurers (ABI).

The Head of Energy, Power and Utilities at Barbican Insurance Group has now made the jump across to loss adjustor AqualisBraemar. Olivier Decombes joins the firm as Director of Loss Adjusting, based in London and serving both the African and European markets. His experience includes not only his time at Barbican, but also a 12-year career with Schlumberger as a Field Engineer, moving into the Energy insurance market with Infrassure Ltd., and subsequently holding positions with CV Starr in both Paris and London.

The Managing General Agents’ Association (MGAA) has appointed former One Commercial boss, Mike Keating, as its new Managing Director. Keating will assume the role on 8 September 2020 and succeeds Peter Staddon, who earlier this year announced he was set to retire.

Jonathan May will now be in charge of finance across the international network of Lloyd’s of London, after being promoted to International Chief Financial Officer. Still reporting to Lloyd’s CFO Burkhard Keese, May moves up from his previous role as Chief Financial Officer for Asia-Pacific. The EY alumnus came onboard Lloyd’s in the UK in 2006 before relocating to China a decade later and being appointed to the APAC post in December 2018.

RKH Specialty is hoping its Aviation team will soar after trebling in size. The firm has brought in 14 senior aviation experts across London and Colombia as it outlined a wider plan to build the “largest independent logistics team” when incorporating its resources in Cargo, Marine and Aviation.

HDI Global Specialty SE has swooped for two key hires – both from the same firm. It has picked up Louise Parker and Charles Boorman, from Neon Syndicate 2468, with both heading to the firm’s London office.

Chris Stooke, who has been succeeded by Paul Jardine as Chaucer Chairman, has a new role to play in the New Year. The NFU Mutual Senior Independent Director has been named incoming Non-Executive Chair of Lloyd’s Managing Agency Atrium Underwriters Ltd. Effective come January 2021, the appointment will see Stooke take over from Steve Cook, whose planned retirement is slated for the end of the year.

 

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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