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General Insurance Newsletter Friday 4th May 2018

04 May 2018

Market News

Last month Fitch Ratings was on the lookout for the latest Association of British Insurers (ABI) sales data, which the credit rating agency said would confirm the downward trend in premiums. Now the confirmation has come. According to a Press Association report published by the Daily Mail today, ABI’s motor insurance premium tracker showed the average cost of private comprehensive cover dropping quarter-on-quarter for the first time in two years. The £478 average, however, is said to be the highest for any first quarter since the trade body started tracking premiums in 2012.    

Pool Re has published its latest Terrorism Frequency Report, which looks at terrorism trends and reinsurance in advanced markets spanning the 25 years since its foundation – Including recent attacks such as in Salisbury. The report, which coincides with the government-backed reinsurance pool’s quarter-century anniversary, provides “an insight into the shifting nature of the terrorist threat,” looking at the frequency of attacks, the changes in methodology and the financial impact of the property damage caused.

It looks like Randall & Quilter (R&Q), which recently sold its Lloyd’s managing agency and insurance services businesses, made the right move to focus on legacy acquisitions and programme underwriting management. For the year ended December 31st, the Bermuda-based firm posted a pre-tax profit of £23.5 million. This includes the £11.8 million net profit from the sale of the Lloyd’s managing agency. With 38% underlying profit growth, R&Q also announced a higher final dividend of 5.4 pence per share. Calling 2017 “a year of transformation,” group chair and Chief Executive Ken Randall believes R&Q is in good shape.

Aviva’s preference shares issue was undoubtedly one of the biggest news last month, and it looks like the British giant is doing all it can to undo it. In a move to make amends with preference shareholders who sold their shares at a lower price prior to Aviva’s March 23rd announcement that it was no longer taking action to cancel its preference shares, the insurer today revealed its offer of a discretionary goodwill payment. It covers the period from March 8 to 22, inclusive. 

A water main burst last week near a residential street in Wednesbury. According to reports, it was enough water to fill six Olympic-sized pools. The pipe has since been repaired by South Staffordshire Water following the incident, but a first responder says a lot remains to be done.

Fashion retailer N Brown suffered a massive hit, and the worst isn’t over.  N Brown – known for brands JD Williams, Simply Be and Jacamo – reported statutory profit before tax of £16.2 million for the year ended March 3rd, a nearly 72% plunge. This was attributed to costs worth £56.9 million, a big chunk of which related to payouts involving historic general insurance products.  

Axa Insurance has teamed up with Cobalt Underwriting on a new Shariah-compliant real estate insurance product. The Insurer noted that the new product, which is available now and will be distributed via Brokers in the UK, is a bolt on to its existing real estate offering. Axa explained that it had devised new premium payment and claims processes to ensure the product adheres to the key principles of Islamic insurance.

The Financial Conduct Authority (FCA) has published a warning about Blue Insurance UK which it described as a “clone firm” operating on an unauthorised basis. The regulator stated in a warning note: “Fraudsters are using the details of firms we authorise to try to convince people that they work for a genuine, authorised firm.”

Liberty Specialty Markets (LSM) has launched a product aiming to prevent contract negotiations between businesses stalling because of concerns relating to intellectual property (IP). LSM, part of Liberty Mutual Insurance, said its Intellectual Property Contractual Liability Insurance will be sold via Brokers in the UK and internationally. The firm detailed that the policy had been designed to provide a solution for IP indemnification issues that could otherwise delay or end a potential contract.

Lycetts is targeting a new office in Bristol as part of its ongoing expansion plans. The Newcastle-headquartered group, which is already present in 12 locations, is seeking four to six staff across high net worth and commercial business, to help it deepen its client book in the West Country. In addition the firm would like to add four members of staff in its London office.

Online reverse auction marketplace Honcho has stated it is set to disrupt the car insurance sector when it launches in Autumn 2018. The mobile app, which claimed it is the first of its kind for financial services, has said it will disrupt price comparison websites by allowing car Insurers to bid from business from consumers. The firm added that it has recently been authorised by the Financial Conduct Authority (FCA) and has secured £830,000 of investment following a CrowdCube campaign.

Renovation Underwriting, a Managing General Agent focused on HNW renovation for commercial and private clients, has been developed with former Sterling-owner Nicholas Cooper as a Director. It was reported that Cooper, who sold Sterling to Covéa in 2014, has re-entered the insurance market with the proposition and has a 50% share in the new initiative alongside his son William Cooper, CEO of HNW Broker Stanhope Cooper.

The Financial Conduct Authority (FCA) has updated the market on its review of the Financial Services Compensation (FSCS) scheme. The regulator stated that its plans to change funding classes and the FSCS compensation limits - to £85,000 for certain investment, finance and debt issues - were “supported” in its consultation.

The Treasury has confirmed the delay of the implementation of the Insurance Distribution Directive (IDD) until 1 October 2018.

Zurich is to restructure its underwriting operation in the UK as it seeks to become a “simpler, more streamlined and customer-focused” organisation. The Insurer announced that its Leeds office would host a new SME team focusing on small businesses with more complex requirements.

In further news, a new regulatory report published today shows Zurich’s Swiss Solvency Test ratio at 216 percent, well in excess of requirements, demonstrating the strength of Zurich’s balance sheet.

Insurance giant Swiss Re is widening its reinsurance offering in South Africa, re-domiciling its Southern African property and casualty business onto the continent.

QBE Insurance Group Limited (QBE) is taking advantage of artificial intelligence (AI) to enhance its operations globally. The firm has partnered with machine learning company HyperScience, entering into a multi-year commercial use agreement to roll out the latter’s solutions across QBE. In addition, its venture capital arm QBE Ventures has closed an investment into the AI start-up.

Market Movers and Shakers

Canopius announces the arrival of John Shaw as Construction and Engineering Underwriter. John has joined Canopius from QBE Australia where he was Construction Underwriting Manager for Northern Australia.

Stewart Donald, Managing Director of Oxfordshire-based Bridle Insurance, has taken over ownership of Sunderland Football Club, along with a group of international football investors. Donald was previously Chairman of Eastleigh Football Club, but will now relinquish ownership of the club.

Lloyd’s of London announced that its Chief Financial Officer, John Parry, has decided to leave the corporation, after 17 years.
John is a Chartered Accountant and joined Lloyd’s in August 2001. He was appointed Chief Financial Officer in December 2014 and is a member of both Lloyd’s Board and Executive Committee. His responsibilities include financial reporting for the corporation and the market, capital setting and capital adequacy, tax, treasury and investment management. 

The British Insurance Brokers Association (BIBA) has appointed Jonathan Evans to its main board as a Non-Executive Director. Evans, a former Corporate Affairs Minister with responsibility for the insurance industry, served two decades as an MP and MEP, and takes up his position today.

Pioneer Underwriters (“Pioneer”) is pleased to announce the appointment of Simon Gaffney as Group Chief Operating Officer, effective immediately, he will report to Dane Douetil, Group Chief Executive Officer of Pioneer and be based in London.

TLO Risk Services Limited is pleased to announce the appointment of Michael Silcock as a main board Director. Mike will be responsible for continuing the development of TLO’s professional risks business. Mike joins TLO after a hugely successful 30 year career in the insurance industry. Mike spent nearly 15 years at global Broker Aon, most recently as their Head of UK Professions business. Mike subsequently moved to JLT Specialty, to establish a London market PI division, before moving to Willis Towers Watson to assist in the development of their professional services division.

Tokio Marine Kiln (TMK), the leading provider of specialist and corporate insurance, has appointed Anna McNamara as group chief operating officer (COO) with effect from 26 April.

London-headquartered Aon Plc has tapped industry veteran Lambros Lambrou to take on a larger role within the firm. 
Lambrou, who most recently served as Chief Executive of Aon Risk Solutions Australia, has been appointed as Global Chief Commercial Officer, as well as CEO of global specialties for Aon’s commercial risk business.

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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