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As fresh allegations continue to pile up against the Confederation of British Industry (CBI), insurance giant Aviva has cancelled its membership. Earlier today, an exclusive report in the Guardian revealed new claims of assault and harassment by CBI personnel.

A report from Reuters revealed that Aviva said the allegations so far are serious enough to warrant it immediately ending its membership of the UK’s leading business lobby organisation, despite the ongoing independent inquiry commissioned by the CBI and the ongoing police investigation into the claims.

“In light of the very serious allegations made, and the CBI’s handling of the process and response, we believe the CBI is no longer able to fulfil its core function – to be a representative voice of business in the UK,” an Aviva spokesperson said.

The update follows the news earlier this week that the British Insurance Brokers’ Association (BIBA) has also terminated its CBI membership. The deepening scandal is continuing to make national headlines, while the CBI – which is said to represent some 190,000 businesses – has engaged the services of a law firm to conduct an investigation, which is expected to be published later today, Friday, April 21.

Meanwhile, Reuters noted that the City of London Police opened an investigation into what the CBI called “a serious criminal offence”.

Last week saw the CBI sack director general Tony Danker for conduct concerns which the Guardian reported was not linked to the criminal allegations. The CBI has also said an urgent root-and-branch review of its culture is ongoing

“While the CBI was not previously aware of the most serious allegations, it is vital that they are thoroughly investigated now and we are liaising closely with the police,” said CBI president Brian McBride. “The board will communicate its response to this (the independent investigation) and the other steps we are taking to bring about the wider change that is needed early next week.”

Update – the ABI, Zurich and more follow suit

Zurich, Phoenix Group and the Association of British Insurers (ABI) have also announced their decision to quit the CBI. A spokesperson for Zurich UK said the insurer is “deeply concerned” about the allegations and, as such, has decided to “terminate [its] membership with immediate effect.”

A spokesperson for the ABI said: “It has become untenable to retain our membership in light of further serious allegations and we have informed the CBI of our decision to leave with immediate effect.”

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“It’s always an exciting time to be in the insurance industry.”

During a discussion with Insurance Business, Robert Rimmele highlighted how his role within the cloud-first software and data business Ascent has showcased how the right technology partnerships can offset even the direst challenges and leverage the most promising opportunities in the insurance sector.

As co-founder of Tekaris, a German software development house which was acquired by Ascent, Rimmele has spent many years operating in the insurance and reinsurance sectors and has seen for himself the energy, passion and drive that it takes to thrive in the marketplace. For “computer guys”, he said, it’s exciting to see the interplay of information, data and insight that makes up the ecosystem – and to realise that this is all underlined by the relationships at the heart of insurance.

As a UK-headquartered business with centres in Germany, Malta, Bulgaria and Portugal, Ascent was not as impacted by COVID in the way a lot of other businesses were, Rimmele said, given that the team was used to working remotely and not allowing distance to get in the way of implementing its vision. Empathy, energy and audacity are the principles at the core of the data-first company, and it takes a combination of those elements to make partnerships work for all the stakeholders involved.

“The first and most important part of building any great partnership is trust,” he said. “What you’re looking to do is build a partnership which works but it’s also about having a shared vision of where you want your business to go within the industry. Based on that, the sky is the limit, you can do anything.”

Avoiding tech for tech’s sake

There’s no doubt that the industry is facing a brave new world when it comes to the technology and data-driven innovations that are becoming increasingly accessible. Alongside this, however, Rimmele noted that the insurance sector is also facing challenges with regards to data and AI and all the implications these bring.

“But, what the industry needs to understand is that it’s not sufficient just to have the right tools, you need to ask the right questions,” he said. “If you don’t, you’re just throwing technology around and you will spend a lot of money but it will get you nowhere. You see this, where there’s so much investment and it results in half-finished projects that are cancelled because it’s not clear why they were started in the first place.

“When it comes to data and technology, you need to already know where you want to go. At the very least, you need to have clear targets and you need to know what questions to ask and what problems you want to solve.”

The challenges facing the insurance market

For Ascent which works with a range of market players, it’s clear that each business faces its own risks and opportunities when it comes to leveraging technology. But Rimmele noted that looking at the industry more broadly, some key themes do emerge. Among them, he said, is the question of how to get the foundational piece right when building new solutions.

When trying to integrate new technologies and build the expertise required around those, he said, market players need to really understand the methodological foundations of these solutions and what they are looking to deliver. Creating that expertise around how to successfully implement a project and create positive results is a challenge for a lot of people – as is understanding how these solutions need to fit in with their pre-existing business and not operate as a silo.

“Because you discuss these projects on a technical level with tech people, you discuss them on an application level with underwriters, and you talk strategy with respective executives,” he said. “But what you need, is to be able to transcend those layers, to understand that they’re not disconnected and they need to all be brought together eventually.”

For Ascent, helping people to integrate those layers effectively is high on the agenda for 2023, and Rimmele said he is relishing the opportunity at hand to have high-level conversations with entrepreneurs and innovators across the market who want to do things differently.

“The market is ready,” he said. “Everyone is investing, everyone is aware that something has to be done. And they have a good understanding, they don’t need to wait for us to tell them what their strategy should be, they’re all clever people. So, we’re very excited to be having those conversations.”

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It looks like accounting giant PwC had to pay less than 6% of the amount previously being sought in the settled negligent auditing case against the company for its work on failed insurer Quinn Insurance.

Prior to the case settling last year, insolvent Quinn Insurance was seeking €900 million for PwC’s supposed negligent auditing of the business between 2005 and 2008. Quinn Insurance went bust in 2010. PwC, which denied negligence, was also sued for breach of contract and duty.

When the two camps settled in 2022, the terms of what was agreed were not disclosed. Now, according to a report by The Irish Times, PwC paid €53 million to make the €900 million lawsuit go away.

Citing people familiar with the settlement, the publication said neither PwC nor Quinn Insurance’s administrators have confirmed the sum. The Central Bank of Ireland and the Department of Finance were equally mum on the details.

Meanwhile, it was reported that somewhere between €20 million and €30 million went to the Insurance Compensation Fund due to considerable legal fees.

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In a span of three weeks, three major names have left the United Nations-convened Net-Zero Insurance Alliance (NZIA) – this time around we see Hannover Re, the third biggest reinsurer in the world, head for the door.

Without detailing its reasons for the exit, Hannover Re cited “careful consideration” behind the decision. Just like its peers Munich Re and Zurich, though, Hannover Re is similarly sticking to its own climate and sustainability goals.

“Hannover Re remains committed to its sustainability strategy, the associated goals and its support for the Paris Agreement, and aims to achieve full climate neutrality by 2050 at the latest,” said the Talanx Group brand.

According to Hannover Re – which Insurance Business understands is a Climate Alliance Hannover 2035 member – it has operated with a net-zero carbon footprint at its Hannover location since 2016, with that same target set for all of the company’s business operations worldwide to reach by the year 2030.

A signatory to the Principles for Sustainable Insurance, Hannover Re is also part of various regional, national, and global initiatives, associations, and advocacy groups. A list of its affiliations, which no longer includes the NZIA, can be found here.

The NZIA has not publicly reacted to any of the departures.

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Specialty managing general agent Nirvana Risk Partners, which completed its management buyout from Castel Underwriting Agencies in March, has now entered into an incubation partnership with Pro MGA Global Solutions.

“Following the buyout, we are looking for a seamless transition to an independent MGA, and we are very pleased to be partnering with Danny [Maleary] and team, who I’m confident will apply their leading technical expertise to continue to enable the global vision of our business,” shared Nirvana chief executive Kabir Chanrai in a release.

“This is a very exciting time to be launching Nirvana independently, and I’m looking forward to driving ahead with our underwriting-first and service-first mindset. With Pro MGA Global Solutions’ expert support, we can stay focussed on pursuing our long-term growth strategy and delivering valuable solutions to our clients.”

Founded in 2017 by executive chairman Rob Jones, Nirvana specialises in media and technology insurance. Chanrai and Jones are supported by Nirvana’s newly hired head of Europe Thomas Mannsdorfer and sector underwriter Glenn Crickmar.

Commenting on the deal, Pro MGA Global Solutions CEO Danny Maleary (pictured) said: “It’s a pleasure to work with the entrepreneurial Nirvana team who have so successfully built out the business focussing on innovative and profitable cyber, media, and technology liability products.

“Here at Pro MGA Global Solutions, we have extensive experience of the Lloyd’s and London company markets across a wide range of disciplines in brokers, service providers, and insurers, as well as highly relevant experience in the MGA arena across the companies market and international platforms.”

Pro MGA Global Solutions is the independent MGA incubation division of Pro Global Holdings.

“I’m looking forward to bringing the full strength of our network to bear to support the strong growth that is on the horizon for Nirvana in a sustainable way by providing a platform with full regulatory oversight and operational support,” added Maleary.

“This will empower the high-calibre Nirvana team to focus on what they do best: developing innovative products that help solve real-world challenges for their clients.”

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Fidelis Insurance Holdings Limited (FIHL) wants its common shares to be listed on the New York Stock Exchange and has filed a preliminary prospectus with the US Securities and Exchange Commission for its planned initial public offering.

Without providing the IPO price, the holding company said: “Currently, no public market exists for our common shares. We intend to apply to list our common shares on the New York Stock Exchange (NYSE) under the symbol ‘FIHL’…

“We intend to apply for and expect to receive consent under the Exchange Control Act 1972 (and its related regulations) from the Bermuda Monetary Authority for the issue and transfer of the common shares to and between non-residents of Bermuda for exchange control purposes provided the common shares remain listed on an appointed stock exchange, which includes NYSE.

“In granting such consent, neither the BMA nor any other relevant Bermuda authority or government body accepts any responsibility for our financial soundness or the correctness of any of the statements made or opinions expressed in this prospectus.”

FIHL is the parent firm that owns what is known as Fidelis Insurance Group, which consists of insurance operating subsidiaries Fidelis Insurance Bermuda Limited, Fidelis Underwriting Limited, and Fidelis Insurance Ireland DAC. Also part of the group are service company FIHL (UK) Services Limited and its Irish branch.

Separate from FIHL is MGU HoldCo, which officially came to life in January and is the holding company for managing general underwriting platform Fidelis MGU.

According to FIHL, the net proceeds from the IPO are intended to be used to grow its business, by making capital contributions to the group’s insurance operating subsidiaries, and for general corporate purposes.

“This expected use of net proceeds from this offering represents our intentions based on our current plans and business conditions, which could change in the future as our plans and business conditions evolve,” noted FIHL in its preliminary prospectus.

“As a result, our management will have broad discretion over the uses of the net proceeds from this offering, and investors will be relying on the judgment of our management regarding the application of the net proceeds from this offering.”

Lloyd’s is keen to provide insurance for the government, including for the NHS (National Health Service), but the powers that be do not seem convinced.

“While we appreciate the important role the insurance sector plays in building resilience to future risks, it generally does not represent good value for money for central government to purchase commercial insurance,” a report by The Guardian cited a spokesperson for the Treasury as saying amid offers from the camp of Lloyd’s chief executive John Neal and chair Bruce Carnegie-Brown.

“The government is committed to strengthening our own systems and capabilities that support our collective resilience against systemic risks.”

Risk-sharing

Lloyd’s would like to be able to offer cover for the NHS and against climate events. The possibility was reportedly put forward during a previous meeting between Neal and Chancellor Jeremy Hunt.

Subsequently, Carnegie-Brown was quoted by The Guardian as stating: “If we can provide an insurance solution that effectively funded the NHS if it breaches its capacity, or budget issues, then it would show the insurance industry responding in a positive way to something that was caused by an exogenous event.

“Obviously things like a pandemic might cause very dramatic increases in demand on the NHS and its resources.”

It was reported that ILS (insurance-linked securities) could be one way of going about it.

“It’s about understanding what the government’s risk parameters are around these kinds of issues, and historically the government has borne 100% of the risks,” the Lloyd’s chair, who believes the insurance industry can be a government partner in reducing the elements of risk, went on to assert.

“What we’re saying is that the private sector could take a share of this risk, but we would need to explore the precise terms on which we did that.”

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There’s an inexorable agnosticism running in the veins of INSTANDA – and it’s the fuel that powers the insurtech giant’s open-handed approach to partnerships. It all comes down to speed and simplicity, according to CEO Tim Hardcastle (pictured). Those are the two critical metrics for the success of any partnership, whether working with larger insurance incumbents or new startups.

INSTANDA relishes the opportunity it has to work with both sides of the equation, he said, and to exercise the premise at the heart of the business, that of being a “speedboat” helping other ships go faster. It has been a busy few months for the team who have recently been working with a number of healthcare providers looking to do things differently in the insurance market and create meaningful change for their customers.

“I think the common theme between all our partnerships is that the companies most attracted to working with us tend to be facing either a difficult problem to solve or a complex opportunity, depending on whether they’re a glass half empty or glass half full type,” he said. “What they find is that once they’ve done the right elements assembled for success – the regulatory approvals, the balance sheet, the capacity, etc. – then they look at the technology.

“But when you go around the market, you see that the technology available to solve complex problems or enable complex opportunities is few and far between. And the reason for that is simply that technology is very expensive to change. Changing technology takes time and money and when you’re a company trying to be more innovative, you need to make that change relatively quickly and relatively inexpensively.”

Hardcastle noted that there is a real appetite out there for cost-effective, time-efficient solutions that don’t require insurance firms to “bet the farm”, which is where INSTANDA is looking to make its mark. The hallmark of the way the insurtech’s platform works is that it is designed to embrace complexity and simplify it, he said, and, looking across the market, he can’t see many other tech firms able or willing to accomplish that without multi-million-pound price tags.

“The second common theme of our partnerships is that we work with teams that are trying to make the most of those complex opportunities,” he said. “[Our clients] tend to be very ambitious. They’re trying to break the mould and do something different. So, therefore, they can be a bit challenging, a bit demanding and we love that. We liked to be pushed, to be challenged, to be allowed to explore the boundaries of what we can do.”

INSTANDA’s approach to partnerships extends to the ecosystem it is building around itself by working with other companies to bolster its offering and reach. Touching on the latest partnership with UnderwriteMe that the firm is embarking on in the life and health space, Hardcastle highlighted how the right collaboration can eliminate complexity from the inherently complex insurance ecosystem as well as signposting to the wider market that INSTANDA is a trusted and respected brand.

“We’re not just only believers in partnership, we also created a marketplace for ourselves about four years ago which has 200 companies in it,” he said. “And we’re very prepared to be part of other people’s ecosystems, which I think is a hallmark of the respect we have for [the industry]. As a former CIO, I implemented, managed and ran systems that tried to be everything to everybody. They were very expensive and slow to change for that very reason.

“So, with INSTANDA, we went 180 degrees from that. We said, ‘remove the code so change becomes fast and inexpensive. And open yourself up to working with other firms and other technologies that are brilliant at what they do.’ We embrace that we can’t be all things to everybody, you have to accept that there are combinations where two plus two makes five. That’s our philosophy.”

At the end of the day, it all comes back to speed and simplicity, Hardcastle said, and looking across the wider market, it’s clear that the insurance industry is not alone in recognising and appreciating that speed and agility are paramount to success. Look at the history of any sector, and the winners are always the ones who found ways to get ahead of the curve, and who seized every opportunity to become faster and more agile.

This is especially relevant right now, he said, with so much uncertainty facing businesses and with such a plethora of external economic, geopolitical and technological factors all coming together at once. Responding to these different challenges while juggling the changing nature of consumer requirements and expectations is a tightrope but it’s one all organisations have to walk.

“On the one hand, it is very challenging,” he said. “But there’s also a real opportunity in there as well. There’s the opportunity for an organisation to get that speed and agility in place, to make the most of their changing environment, and to meet their customers’ needs and provide a good, reliable experience. Because, in changing times, people want reassurance, solidity and comfort. Insurers that can provide that with the right proposition – they are going to be the winners.”

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ChatGPT, OpenAI’s natural language processing tool, has thrust artificial intelligence (AI) into the mainstream cultural spotlight. More insurance companies are now dipping their toes into the AI pool to gauge its uses.

Swiss insurance group Helvetia is the latest insurer to announce it is testing ChatGPT for its new customer service. Fellow Swiss insurer Zurich said last month that it was experimenting with ChatGPT to find out how AI can help with tasks such as modelling, claims, and data mining.

As carriers explore this new technology, experts have pointed out that there’s one area where companies can see quick wins from AI: customer service.

“There’s been a broad misunderstanding in the insurance industry that AI will replace people altogether,” said Lawrence Buckler (pictured left), VP of sales at Sprout.ai, which uses AI to help speed up claims decisions.

“The hype around ChatGPT has raised awareness of the potential of AI. Rather than replacing people, it enables insurance professionals to provide a better customer experience.”

Sprout.ai partnered with Zurich to produce a claims automation solution in 2021. The London-based insurtech also counts major global insurers like Generali and AXA among its clients.

AI can sift through and review data at a significantly faster rate and with more accuracy than humans, freeing underwriters and claims handlers to do more high-value tasks.

“Claims handlers typically manage one line of business, which is inflexible, and they are focused on the claim and not on the customer,” said Roi Amir (pictured on the right), CEO of Sprout.ai.

“The drive to enable a claims handler to support multiple lines of business is becoming more and more real. With automation, we can make [the claims process] more customer centric.”

AI and ChatGPT among top tech trends

According to Sprout.ai’s CEO, there are three technology-led trends that are making waves in insurance:           

• Artificial intelligence or AI
• The Internet of Things (IoT)
• Parametrics

The ability to train AI models and generate a level of prediction in data allows insurers to take better care of the customers, but also to make better risk management decisions, Amir noted.

“The opportunities are almost limitless with AI,” he told Insurance Business.

IoT technologies, meanwhile, enable carriers to extend their ability to predict and prevent risk. Insurers are leveraging IoT capabilities to assist in customer interactions and accelerate and simplify claims processing.

Networked devices such as telematics and water sensors also create huge volumes of data that can help underwriters to determine risks more accurately.

Finally, bespoke and parameterized insurance solutions are becoming increasingly popular and accessible thanks to technology.

“If you have the sensors, the data, and the AI, you can tailor products specific to the customer,” Amir said.

“Insurers can innovate much more with the right technology because they can adapt it to the right customer at the right time.”

Using AI to adapt to evolving customer expectations

AI and ChatGPT could prove to be useful tools for insurance companies to adapt to the rapidly evolving demands of the market.

Sprout.ai’s research has showed that one in five (21%) of insurance consumers expected claims to be resolved within hours. One hundred percent of younger customers – aged 18-24 – wanted resolution within a week.

The research, which surveyed about 1,000 individuals who had purchased an insurance policy in the last two years, indicated the market was leaning heavily toward a digital-first approach.

“The other thing that we found across all age groups is that a good claim experience is a good predictor for people renewing their policy,” Amir said.

“62% of people that had a good experience on the claim side are likely to renew their policy, while 89% say they are likely not to renew the policy after a bad claim experience. It’s almost a guaranteed churn. Expectations are changing and they’re high.”

For Buckler, increasing market expectations means insurers need to be more flexible, which technology can help them do.

“They need to be able to respond to customer demands and be able to do that at scale,” said Buckler. “That’s where AI can play a big part.”

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Hedge fund Third Point LLC is interested in potentially snapping up SiriusPoint, the board of which will thoroughly consider any such proposal.

SiriusPoint, which reported a US$402.8 million net loss available to common shareholders for 2022, came to life in 2021 as a result of the merger between specialty reinsurer Third Point Reinsurance and multi-line (re)insurer Sirius International Insurance Group.

The business is currently led by RSA alumnus and chief executive Scott Egan, under whose leadership SiriusPoint announced office closures in late 2022.   

Now, in a recent pronouncement, SiriusPoint said: “SiriusPoint Ltd. has acknowledged an indication of interest from Third Point LLC and certain of its affiliates… to explore a potential acquisition of all, or substantially all, of the outstanding common shares of the company.     

“Consistent with its fiduciary duties, in consultation with its financial and legal advisors, the SiriusPoint board of directors will carefully evaluate any proposal to acquire the company, if and when a proposal is received.”

SiriusPoint added that dialogue with its investors is “always welcome”.

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