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The WOMAD Festival may have to be cancelled this year because of the lack of insurance coverage for the event – and the industry, including one particularly big name, is calling for the government to step in.

Peter Gabriel, the singer-songwriter who co-founded WOMAD, told BBC Radio that the UK government should introduce “something like an insurance scheme, some sort of underwriting scheme,” adding that the organizers would likely have to cancel if there is no government support – especially when the festival had faced bankruptcy on two previous occasions.

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Lloyd’s Central Fund is a mechanism, governed by the Council of Lloyd’s, which will pay any valid claim that cannot be met from the resources of any member.

The new multi-layered cover will reimburse aggregate payments from the Central Fund in excess of £600 million, up to £1.25 billion. This, Lloyd’s said, serves as a key component in its chain of security. Its layered structure is supported by newly created cell company Constellation IC Limited, which is financed by J.P. Morgan. It also includes a panel of eight major reinsurers: Arch, Berkshire Hathaway, Everest Re, Hannover Re, Munich Re, RenaissanceRe, SCOR and Swiss Re.

Aside from providing a layer of protection to the Central Fund, the new structure creates a significant buffer against adverse solvency developments and improves Lloyd’s central solvency ratio.

“We are very proud to place this innovative cover with eight of the world’s leading reinsurance companies and secure the support and commitment from one of the largest investment banks, J.P. Morgan,” said Burkhard Keese, chief financial officer of Lloyd’s.

“This unique structure will enable us to support the market’s growth ambitions over the next few years, while also strengthening the resilience of our balance sheet. Our capital management and position are now more resilient than ever, providing enhanced protection for customers.”

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And, given the role that technology is increasingly playing in every profession, from teaching, to medicine, to law, to insurance, the concern raised by initiatives like ‘Insuring Women’s Futures’ that women may be at risk of falling behind a digital skills divide is a credible one. Recent UCAS data, provided by HESA revealed that only 35% of UK STEM students in higher education are female and so there is an expediated need to encourage more girls and women to explore tech opportunities.

It was in this spirit that Insurance Business recently spoke to several senior leaders involved in the insurance industry about what it means to work in an innovation-orientated role and what qualities are needed to have a successful career.

For Markel’s chief digital officer Carla Owens (pictured above), the route to her current role only really began several years into her career when, around 2009, words like innovation and big data and predictive analytics started to be bandied about the insurance marketplace. She was curious about that, she said, and knew she wanted to be a part of the journey of figuring how to leverage data and operationalise it to form technology solutions. She made the leap from the underwriting side of insurance to the technology space, which at the time was completely outside her comfort zone, and has never looked back.

“Over time, I started to take on larger roles, beginning with more of the project management and implementation side, and then moving into more strategic roles centred on empowering the business by leveraging technology towards success,” she said. “So, I’ve been at Markel now for about just over two years and it’s been an amazing journey. And quite frankly this is my dream job because I get to empower the business from a technology standpoint… and figure out digital ways to solve its problems, not just from a short-term perspective but also a long-term perspective.”

Read more: BT’s Alex Foster on the cyber exposure created by mega-mergers

Highlighting her own passion for the tech space, BT’s director of insurance, wealth management and financial services, Alexandra Foster (pictured immediately below) noted that her favourite part of working in the industry is the opportunity to work on something new every day.

“The world of tech is constantly evolving,” she said, “and being able to help customers solve problems through technological innovation is extremely fulfilling. At BT, our mantra is to ‘Connect for Good’, and I love working in an environment that cultivates a growth mindset.”

Leaning on her experience within the sector, Foster highlighted her belief that the twin traits required of leaders in the tech industry are those of empathy and vision. It is diversity that unlocks innovation by introducing fresh perspectives, she said, and having women involved in decision-making within the tech industry is important in and of itself because it brings new ideas to the table and pushes boundaries.

“The reality is that, in the tech space, we don’t always know who our end customer is,” Owens said. “And we don’t know their background because we don’t usually get to have those watercooler-type conversations with [our clients]. So, from my perspective, to succeed in this space there has to be a diverse group of people at the table that are contributing to what that end experience will look like. … In order to be successful, you need to have a makeup of a team that is diverse in nature and diverse in thought and [willing] to challenge each other.”

It could be said that women can sometimes bring a bit more empathy, or more of a trust standpoint, to the table, Owens said, and by bringing these diverse groups together you can ensure you’re getting the best customer experience built into that innovative technology piece.

Caroline Bedford (pictured immediately above), chief executive of the innovation, education and development firm EDII, considers herself lucky to have worked with a real mix of leadership and personality styles over the years – working alongside empathetic man and unsympathetic women, and vice versa. Certainly, in the last few years, she said, the people who have supported her have been both male and female.

“So, I don’t think being a woman has brought a different level of skill to my tech career, I think being me has,” she said. “And I sometimes get asked in mentoring sessions from young women looking to have a family and a career – ‘what’s the magic bullet that helps you?’ Firstly, there isn’t a magic bullet, we all have our own struggles… but I do think taking responsibility for your choices is important.

“And one of the things that I do say in that situation is that, if you do choose to have a career and you want a family then be very careful in your selection of a partner. Don’t leave that to chance, make sure if you have a partner that your career is as important to them as theirs is to you. Whenever I’ve looked at working in Bermuda or spending time in Singapore etc, my husband has always said ‘we’ll make it work.’ And we always do make it work.”

Overall, Bedford said, she doesn’t see the success she has enjoyed throughout her career as being linked to her gender but rather down to a myriad of other factors including the fact that she has empathy and is considerate for people, that she thinks about the bigger picture and that she has energy. And none of those factors are just female qualities, she said, but they are the qualities needed to thrive in the innovation space.

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According to Gallagher, the acquired businesses will be rebranded in the coming months. As part of the transition process, Guido Hesse will cease working on day-to-day operations as CEO, and will instead focus on strategic leadership as chairman of the board.

The firm will also open a new branch in Geneva, to be headed by Anthony Faessler, which will significantly increase its employee headcount.

“As a fully integrated part of Gallagher in Switzerland we are in a strong position to offer our clients the best solutions both in the national and international arena,” said Hesse. “Additionally, we are expanding our office network and investing in digitalization to improve the exchange of data and information with our clients and partners by implementing an improved IT system, which will create added value for both our clients and for us.”

Meanwhile, Stephan Bachmann has been appointed as the venture’s CEO, succeeding Hesse. As a member of the executive management team, he was previously in charge of international clients and property insurance, overseeing national and international industrial clients. Bachmann previously held various leadership positions at well-known international industrial insurers in Switzerland and abroad.

“Creating a wholly owned on-the-ground Gallagher presence in the strong economy of Switzerland, with its mature and globally significant insurance market, is another exciting development in our current European expansion,” said Vyvienne Wade, chairperson of Gallagher Global Broking in Europe, the Middle East, & Asia.

“The Hesse & Partner team has an excellent reputation for providing innovative solutions for industrial and commercial clients and it is known for its exceptional industry expertise in the increasingly important waste-to-energy sector. We have built a strong rapport with the firm and under the leadership of Stephan the team will play an important role in our development and growth in Switzerland.”

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Even without the pandemic, Kennedy noted that the regulatory reforms sweeping the insurance sector, between the FCA’s ban on general insurance price walking and the Ministry of Justice reforms, each constitute substantial changes with resounding knock-on impacts. To have so many factors all happening at the same time has made for a very unusual period.

Yet, while the last year or so has been quite hectic, he said, it has been rewarding to be in a position of supporting clients in understanding what each regulatory change means for them and in helping them to determine the different strategies required to respond to changes in the market. For Pearson Ham, as a pricing consultancy firm, this has meant more than just discerning market insights but also developing these further to generate recommendations for clients.

A key component of this has been finding new ways of sharing its findings, and the business has utilised a variety of channels during lockdown, including regular webinars exploring market updates. Touching on the firm’s most recent webinar, Kennedy highlighted some of the key factors behind the current pricing tumult.

“We’ve seen a massive price deflation within the motor insurance market,” he said. “At the beginning of last year, there were actually some increases coming in, after a short period of deflation towards the end of 2019. In terms of profitability, we were at a point where the prices needed to come up as the combined ratios were over 100%, so, from an underwriting perspective, the industry was loss-making – the point at which the cycle usually turns.

“At the beginning of the year there were several storms so prices in January/February did start to go up a bit, then the pandemic hit. This caused disruption and uncertainty and prices increased into March, a lot of which was around logistical challenges. So we did see either prices increasing or quoteability dropping, not due to profiteering but rather as insurers tried to stem the number of calls coming to their centres.”

When it became clear that the volume of traffic usage had dropped substantially, prices started to come down significantly across the sector. From March through to the rest of the year, he said, competition intensified with the vast majority of insurers reducing their prices, but they were still not getting the volume impact they expected from this reduction. This led to bigger price reductions, only buffered by the reduced claims frequency being seen, which then began levelling off a bit towards the end of the year.

Read more: FCA’s new rules against general insurance price walking revealed

And then the FCA’s announcement on banning dual pricing came out in September, he said, which caused many providers to pause for thought as the question of how this ban would be funded came to the fore. From his overview of the market, Kennedy had seen some insurers initiating something of a “land grab” before the new regulations were implemented in a bid to bring in as much new business as possible while they still have a differential between new business and renewal pricing.

“So it’s just a case of who’s got the nerve to carry that on, and how much they’re willing to invest in doing it,” he said. “I would expect there to be more of a levelling off because of the easing of restrictions. If people are starting to get back out on to the road, then the ‘benefits’ of lockdown are going to be quickly diminished. So I think there’s probably more nervousness now about putting that level of price-cutting in.”

The market is currently down about 15% in terms of premium year on year, he said, which is particularly significant in light of the regulatory change around pricing and the chunk of profit this is going to take out of the market once people can no longer be overcharged at renewal. The FCA’s ruling is a nuanced consideration, he said, because the facts of the matter show that six million people are being overcharged, which needs to be addressed. But then this only represents about 20% of the market, which means that 80% of the market is either paying the right amount or being undercharged.

“The FCA has also estimated that insurers and intermediaries are investing around £2.3 billion into acquiring new business,” he said, “and that cost will have to be borne by somebody, by all customers, if they aren’t able to use the overcharging of renewal customers to cross-subsidise it. So, in terms of fairness, it’s the right thing to do, but it does mean that everybody else is going to have to pay for that and I think that’s probably something that’s been missed a bit. In terms of what happens to industry pricing, new business prices will have to come up to rebalance what’s happening at renewal, and it’s just a case of when that happens.”

Read more: Car claims on the rise as restrictions ease, says LV=

Pearson Ham, which keeps a close watch on what insurers’ requirements are both in terms of understanding regulatory changes and in developing strategic objectives, is now seeing a lot of demand from insurance companies looking for a viewpoint on their competitors’ moves and insights into when the market starts to move up. Nobody wants to be the first to move, Kennedy said, particularly in a market that’s so reliant on price comparison websites and where price elasticity is so high. 

A very small price change can move an insurer from position one to position 10 on these sites and, if you’re outside of the top four or five, you realistically won’t be able to sell almost anything, he said. Nobody wants to be in that position, even if it’s going to be for a short period, which is why there’s an increased demand for market price tracking. Insurers are keeping an eye on competitors’ moves, what segments are being targeted and, increasingly, on the lifetime value of customers.

“There are some people who are more likely to renew than others, regardless of what the price is,” he said, “so you may not be able to overcharge them next year, but you’ve still got a pretty good chance of retaining them. And it’s just a question of how to rebalance that by bringing on board more of those people who are more likely to renew and charging appropriately for the people who are less likely to renew because you’re not going to be able to increase the margin on them later in the tenure. So that sort of stuff is what’s happening now and that’s what insurers are keen to understand.”

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Intact Financial Corp. and its Danish insurer partner Tryg A/S have sealed a deal to sell Codan Forsikring A/S’s Danish business (Codan Denmark) to Alm. Brand A/S Group for around $2.52 billion (approx. £1.79 billion), according to the Canadian Press.

Codan Denmark was acquired by Intact and Tryg A/S through their £7.2 billion takeover of RSA Insurance Group, which was finalised last week.

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Caerphilly-headquartered brokerage Thomas Carroll Group has a new home in London.

“We have moved from our office in Tower Hill to Berkeley Square,” announced the group, which also has premises in Swansea, Pembrokeshire, Newport, and Hereford. Its new London site is on the fourth floor at 49 Berkeley Square.

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Marsh Networks joins the ranks of other networks that are now owned by consolidators, including Cobra Network (PIB), Bravo (Ardonagh) and Brokerbility (Clear Group).

The latest deal caps a recent re-alignment of the whole network model, which has led some commentators to question the long-term future for this key part of the UK’s broking landscape.

As the first finance provider to focus specifically on networks, Close Brothers Premium Finance (CBPF) is more than an interested observer in how networks will fare in the 2020s, and, despite all the changes, I believe there are good reasons to be optimistic.

It is no secret that consolidators see networks as a source of acquisitions. Consolidators have made clear their intentions to carve out better deals with insurers and bring new panel members on board as well as growing its membership base. For example, Cobra has recently hired networks veteran Les Brewin, with a brief to bring new members to the network.

For start-ups and independents in particular, networks are great at providing access to the market, giving them competitive rates, assistance with marketing training, financing for acquisitions and help with compliance.  

Networks also enable their members to access service suppliers, including software houses, giving brokers the ability to plug into the latest technology, and finance providers, such as CBPF.

The access is important, because finance is a critical element of a broker’s profitability, and as part of our ongoing relationship with network members we not only provide access to finance, but we also work closely with them to make sure they introduce finance to customers in a compliant manner.

CBPF helps enhance the network’s profitability, arranges financing deals for new members, helps set up agencies, and liaises with and troubleshoots for the members through our dedicated networks manager. In fact, premium finance forms a big part of the overall network proposition.

The wave of acquisitions in networks mirrors M&A in broking more widely, and, in truth, the networks’ acquirers are injecting fresh life into the model. Network performance has been steady if unspectacular for a number of years, but now, with new aggressive owners looking to expand, it will be interesting to see what they offer.

For brokers looking to sell their businesses, vendors have never had it so good. Networks have sharpened up their sales propositions accordingly, but the other side of the coin is that it can give those who are not interested in selling the best platform to develop their business, especially start-ups and smaller independents who might otherwise struggle to attract the attention of insurers.

Coming off the back of a sale, account executives and managers wanting to start again can also join a network, become an Appointed Representative (AR), or become part of a franchise.

These models are emerging because competition is intense, and with competition comes new ways of doing business. As consolidation shrinks the overall number of brokerages, the only way to grow is to take share from a competitor.  That drives innovation, including new propositions from Hedron, Cobra and Coversure. Software houses and finance providers play a key role in the development of these new propositions.

It is good to see the sector re-energising itself, and, of course, that eventually feeds through to customers in the form of better deals.

As the economy continues to emerge from the pandemic, we look forward to partnering with the network owners to play our own key role in tapping into that new energy in the networks sector.

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Beere is a veteran of the Lloyd’s and London markets, with 23 years’ experience, specialising in property and package business. He joins Aston Lark from JLT, later acquired by Marsh, where he spent the past 15 years, most recently as regional director for London market risks. Prior to that, he spent four years as a property insurance broker for Aon. 

The company also announced that incumbent Incepta directors Paul Smith and Clive Gilbert will leave the business in the summer. Beere will work together with James Hancock to drive the group’s London P&C business, through supporting the company’s placement requirements and expanding third-party wholesale broker distribution.

Incepta, which was acquired by Aston Lark in August 2020, specialises in providing property, casualty and professional indemnity solutions in the London Market to regional brokers.

“We are excited for Rob to be joining the Incepta team in November,” said Stuart Rootham, managing director of Aston Lark Group.

“As part of our overall growth vision, Aston Lark has significant ambitions for our London Market capability. It’s an important pillar of our offering and we will continue to hire experienced talent and seek further acquisitions to build on the expertise and strength already provided by Incepta, Brunel Professions and Protean Risks.”

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